Skip to main content

Full text of "North Carolina Register v.3 no. 12 (9/15/1988)"

See other formats


I RBk KPN/THm/.f^Q/A^^-y 



RECEIVF" 



SEP 19 1988 
LAW UBRARy 



The- 
NORTH CAROLINA 

REGISTER 



IN THIS ISSUE 



TITU 
I TION 



PROPOSED RULES 

Administrative Hearings 

Agriculture 

Community Colleges 

Human Resources 

Insurance 

NRCD 

State Personnel 

FINAL RULES 
Revenue 



LIST OF RULES AFFECTED 



ISSUE DATE: SEPTEMBER 15, 1988 



Volume 3 • Issue 12 • Pages 524-593 



maaaMM^ammmtMM 



INFORMATION ABOUT THE NORTH CAROLINA REGISTER AND ADMINISTRATIVE CODE 



NORTH CAROLINA REGISTER 

The North Caroliua Register is published bi-monthly 
and contains information relating to agency, executive, 
legislati\e and judicial actions required by or affecting 
Chapter 150B of the General Statutes. All proposed, ad- 
ministrative rules and amendments filed under Chapter 
150B must be published in the Register. The Register 
will typically comprise approximately fifty pages per 
issue of legal text. 

State law requires that a copy of each issue be pro- 
vided free of charge to each county in the state and to 
various state officials and institutions. The North 
Carolina Register is available by yearly subscription at 
a cost of ninety-five dollars ($95.00) for 24 issues. 

Requests for subscriptions to the North Carolina 
Register should be directed to the Office of Ad- 
ministrative Hearings, P. O. Drawer 1 1666, Raleigh, N. 
C. 27604, Attn: Subscriptions. 

ADOPTION, AMENDMENT, AND REPEAL OF 
RULES 

An agency intending to adopt, amend, or repeal a rule 
must first publish notice of the proposed action in the 
North Caroli)ia Register. The notice must include the 
time and place of the public hearing; a statement of how 
public comments may be submitted to the agency either 
at the hearing or otherwise; the text of the proposed 
rule or amendment; a reference to the Statutory 
Authority for the action and the proposed effective date. 

The Director of the Office of Administrative Hearings 
has authority to publish a summary, rather than the 
full text, of any amendment which is considered to be 
too lengthy. In such case, the full text of the rule con- 
taining the proposed amendment will be available for 
public inspection at the Rules Dixision of the Office of 
Administrative Hearings and at the office of the pro- 
mulgating agency. 

Unless a specific statute provides otherwise, at least 
30 days must elapse following publication of the pro- 
posal in the North Carolina Register before the agency 
may conduct the required public hearing and take ac- 
tion on the proposed adoption, amendment or repeal. 

When final action is taken, the promulgating agency 
must file any adopted or amended rule for approval by 
the Administrati\e Rules Review Commission. Upon ap- 
proval of ARRC, the adopted or amended rule must be 
filed with the Office of Administrative Hearings. If it 
differs substantially from the proposed form published 
as part of the public notice, upon request by the agen- 
cy-, the adopted \ersion will again be published in the 
North Caroli)ia Register. 

A rule, or amended rule cannot become effecti\e 
earlier than the first day of the second calendar month 
after the adoption is filed with the Office of Ad- 
ministrative Hearings for publication in the NCAC. 

Proposed action on rules may be withdrawn b>' the 
promulgating agency at any time before final action is 
taken by the agency. 

TEMPORARY RULES 

Under certain conditions of an emergency nature, 
some agencies may issue temporary rules. A temporary 
rule becomes effective when adopted and remains in 



effect for the period specified in the rule or 180 day 
whichever is less. An agency adopting a temporary ru 
must begin normal rule-making procedures on the pei 
manent rule at the same time the temporary rule i 
adopted. 

NORTH CAROLINA ADMINISTRATIVE CODE 

The North Carolina Administrative Code (NCAC) 
a compilation and index of the administrative rules o 
25 state agencies and 38 occupational licensing board 
The NCAC comprises approximately 15,000 letter size 
single spaced pages of material of which approximate 
ly 35 "6 is changed annually. Compilation and publica 
tion of the NCAC is mandated by G.S. 150B-63(b), 

The Code is divided into Titles and Chapters. Eac 
state agency is assigned a separate title which is fur 
ther broken down by chapters. Title 21 is designatec 
for occupational licensing boards. 

The NCAC is available in two formats. 

(1) Single pages may be obtained at a minimun 
cost of two dollars and 50 cents ($2.50) for 1 
pages or less, plus fifteen cents ($0.15) per eac 
additional page. 

(2) The full publication consists of 52 volumes 
totaling in excess of 15,000 pages. It is sup 
plemented monthly with replacement pages, 
one year subscription to the full publication in 
eluding supplements can be purchased fo 
seven hundred and fifty dollars ($750.00). Ii 
dividual volumes may also be purchased wi 
supplement service. Renewal subscriptions fo' 
supplements to the initial publication availabl 

Requests for pages of rules or volumes of the NCA( 
should be directed to the Office of Administrativ 
Hearings. 

NOTE 

The foregoing is a generalized statement of the pro 
cedures to be followed. For specific statutory language 
it is suggested that Articles 2 and 5 of Chapter 150B o 
the General Statutes be examined carefully. 

CITATION TO THE NORTH CAROLINA 
REGISTER 

The North Carolina Register is cited by volume, issue 
page number and date. 1:1 NCR 101-201, April 1, 198i 
refers to Volume 1, Issue 1, pages 101 through 201 o 
the North Carolina Register issued on April 1, 1986 



North Carolina Register. Published bi-monthly by 
the Office of Administrative Hearings, P.O. 
Drawer 1 1666, Raleigh, North Carolina 27604, pur- 
suant to Chapter 150B of the General Statutes. 
Subscriptions ninety-five dollars ($95.00) per year. 
North Carolina Administrative Code. Published 
in looseleaf notebooks with supplement service by 
the Office of Administrative Hearings, P.O. 
Drawer 1 1666, Raleigh, North Carolina 27604, pur- 
suant to Chapter 150B of the General Satutes. 
Subscriptions seven hundred and fifty dollars 
($750.00). Individual volumes available. 



\ 



ISSUE COMEN IS 



NORTH 
CAROLINA 
REGISTER 




Office of . i dministrattve Hearings 

P. O. Drawer 11666 

Raleigh, AC 27604 

(919) 733 - 2678 



Robert A. Mclott, 

Director 
James R ScarceUa Sr., 

Deputy Director 
MoUy Maj.on, 

Director APA Services 



Staff: 

Ruby Creech, 

PubliCiUiotis Coordinator 
Teresa KUpatnck, 

Editorial Assistant 
Je;in Shirley, 

Editorial Assistant 



PROPOSED RULES 
Administrative Hearings 

General 579 

Hearings Division 581 

Rules Division 580 

Agriculture 

N.C. Pesticide Board 524 

Community Colleges 
Board of Community 

Colleges 557 

Human Resources 

Facility Services 524 

Mental Health: General 530 

Mental Health: Other 

Programs 530 

Social Services Commission 531 

Insurance 

Life: Accident and Health 

Division 534 

NRCD 

Community Assistance 555 

Division of Economic 

Opportunity 556 

Wildlife Resources 

Commission 555 

State Personnel 

Office of State Persormel 559 



11. FLSAL RULES 
Revenue 

Sales and Use Tax 584 

III. LIST OF RULES AFFECTED 

September 1, 1988 585 

rV. CUMULATLV E ESDEX 591 



-^i^S 



NOR in ( AROLINA Rl (.ISIKR 

Puhlkation Deadlines and Schedules 

I September /OSS - March I^SQj 



Issue 


Last Dav 


Last Day 


firliest 


+ 


Date 


for 


for 


Date for 


Earliest 




liling 


I'lectronic 


Puhlic 


rifective 






filing 


1 Icanng & 
Adoptmn by 
AgL-ncs 


Date 


++++++++ 


+***+*++ 


*++++++* 


+ ¥*T***T 


*******i 


09.0 1,88 


08'11'88 


08 18/88 


10 01 w 


01 01 89 


00 1 5 88 


OS 26 88 


09 02 88 


10 15 SS 


01 01 89 


10 03 88 


09 12 88 


09/19 88 


11 02 88 


02 01 89 


10 14,88 


09 26 88 


10 03 88 


11 13 88 


02 01 89 


1101,88 


10 11 88 


10 18 88 


12 01/88 


03 01 89 


11/ 15; 88 


10 26 88 


1 1 02 88 


12, 15 88 


03 01 89 


12 01 88 


11 07,88 


1115 88 


12. 31 '88 


04 01 89 


12 15. 88 


1123 88 


12 02 '88 


01,14 89 


04 01 89 


01 02,89 


12 08 88 


12 15 88 


02.01,89 


05/01/89 


01 16,89 


12 27 88 


01 03 89 


02,15.89 


05 01/89 


02 01/89 


01, '10/ 89 


01/17/89 


03,03 89 


06/01,89 


02,' 15/ 89 


01/26 89 


02 02 89 


03,17/89 


0601/89 


03 01,89 


02 08 89 


02' 15 89 


03/31/89 


0701 89 


03 15,89 


02 21 89 


03 02 89 


04 14,89 


07,01 89 



* The "Earliest Fffecth-e Date" is computed assuming that the public hearing 
and adoption occur in the calendar month immediately following the "Issue 
Date", that the agency files the rule with The Administraii\e Rules Review 
Commission by the 20th of the same calendar month and that ARRC approves 
the rule at the next calendar month meeting. 



PROPOSED RULES 



TH LE 2 - DKPAR I .MENT OF 
AGRK I i;HRE 

1\ otkc is hereby given in accordance with G.S. 
I SOB- 1 2 thai the North Carolina Pesticide Board 
intends to amend rule(s} cited as 2 NCAC 9L 

.1002. 

I he proposed cffecth-e date of this action is 
February I, /9S9." 

1 he public hearing will be conducted at 1:00 
p.m. on November 3, I98S at Board Room, Agri- 
culture Building, One Edenton Street, Raleigh, 
N.C. 276/1. 

{^ ommcnt Procedures: Interested persons may 
present statements either orally or in writing at the 
public hearing or in writing prior to the hearing 
by mail addressed to John L. Smith. Secretary, 
North Carolina Pesticide Board, P. O. Box 27647, 
Raleigh, NC 27611. 

(MAPI I R 9 - FOOD AND DRl G PROTECTION 
DIVISION 

SI B( IIAPIKR 9L - PESnCIDE SECTION 

SECnON .1000 - AERIAL APPLICATION OF 
PESTICIDES 

.1002 (.KNKRAL REQLIRKMENTS 

(c) /Ml agncultural aircraft operations (pilot or 
contractor) shaU keep a written record to he 
completed within 72 hours f^^ee number -1-3 m this 
Paragraph fof oxccption) after each application. 
This requu-ement must be fullUled sooner if re- 
quested by an employee of the Pesticide Section 
for the purposes of a pesticide incident investi- 
gation. The record shall show the following: 

( 1 ) name of contractor; 

(2) name and address of the person for whom 
the pesticide was applied; 

(3) identification of farm or land sites treated 
with pesticidc(s); 

(4j name of crop which was treated; 

(5) total number of acres treated; 

(6) the year, month, day, and approximate 
time the pesticide was applied; 

(7) the brand name of the pcsticidc(s) and 
r. PA registration number; 

(8) amount of formulated product or active 
material applied per acre (must spcciiy); 

(9) total gallons or pounds per acre of the 
final tank mix applied per acre; 

(10) name of pilot; 

(1 1) signature of person completing this record. 



(4-3^ conriont agruumunt(f i ) te dc'por . it ' . sitliin 
■WW) fet4 ef rot . id ^ nc e ; 44ms is t++ 1*«* m- 
cludc ' d ift the records si i ilhin ticvon work 

^^^^» ^^^^^^^■ 
II I CL, OT^T^^ 

Statutory Aulhonly G.S. ! 43-458; 143-463; 
143-466. 

TITLE 10 DEPARTMENT OF HLAEAN 
RESOURCES 



No 



otice is hereby given in accordance with G.S. 
I SOB- J 2 that the Department of Human Re- 
sources intends to adopt, amend, repeal rule(sl 
cited as 10 NCAC 3A .0/0/ - .0/02, .020/ - .0205, 
.030/ - .0302, .040/ - .0402, .050/ - .0502, .060/ 
- .06/0, .070/ - .0703, .080/ - .0804, .090/ - .0902, 
./OO/ - ./002, .//O/ - ./102, ./20/ - .1203; /O 
NCAC 3 R ./003. 

1 he proposed effective date of this action is 
January I, 1989. 

1 he public hearing will be conducted at 3:00 
p.m. on October /7, /9S8 at Hearing Room, 
Council Building, 70/ Barbour Drh'e, Raleigh, 
N.C. 27603. 



Cc 



ommcnt Procedures: Address Comments To: 

Lynda McDaniel 

Division of Facility Services 

^0/ Barbour Drive 

Raleigh, N.C. 27603 

Comments will also be received orally at the 

hearing. 

CHAPTER 3 - FACILITY SERVICES 

SL BCHAPI ER 3A - IDENTIFYING 
INFORM.VTION 

SECTION .0100 - DIVISION STRICTLRE 

.0101 LOCATION AND OFFICE HOLRS 

The Di\ision of I'acility Sen.'ices is located at 
Um St. Mary'o Stroet, P4^ 8w* 12200, 701 
Barbour Drive, Raleigh, North Carolina 27605. 
27603. Its otlice hours are eiglit o'clock to fi\e 
o'clock on Monday through F-riday. 

Statutory Authority G.S. /43B-10. 

.0102 PLRPOSE AND RESPONSIHILI I lES 

The purpose of the Division of Facility Ser\'ices 
is to improve the quality of health and social care 
in North Carolina. The division inspects and li- 
censes health and social care facilities; plans, 
maintains, and implements a state-wide emer- 



NORTH CAROLINA REGISTER 



524 



PROPOSED RULES 



gcnc\ iiicdiL\il scniccs system: develops an aii- 
mial liL ' ullli e**fe lueility medical facilities plan, 
m+4 de\clops pnmarv' health care senices m 
small tow ns and rural areas; issues certificates of 
need tor additional or new healtli care services 
and licenses the use and possession ot s(^urces of 
raduKictne materials 



Sialulnij Authority G.S. NSB-W: I43B-I3S. 

SK HON .((2(10 - INK DIKK lOK'S OFUCK 
AM) nil ASSISIAM DIKKC TOR'S OFFICE 

.0201 IMF DIKFCTOR 

The Uirector of the Division of I'acility Services 
is the chiet administratiw otficer of the division 
with the ro '^ poiT ' ihilitiL" ' . povrL'r 'i . responsibility, 
power and duUo '. dut\ t4 (4*e diiocior afe to pro- 
\ide aijL - ncy di\ isu^n -wide management support 
throudi pohcy development, implementation, 
rtfhi interpretation, administrative tunctions, and 
speciaU/ed staff support to the operating sections 
of the division t4 1 cicility .Sc ' r' . ico ' j and their re- 
spective progi'ams The drrector aKo serves as 
Sccretarv of the North Carolina Medical Care 
Commission and provides clerical support to the 
commission. 

Stiitutiity Authority G.S. J4JB-/I). 

.0202 TIIF DFIM 1^ DIRECrOR 

\Mthm the l.^nision of Facility Services is im 
aL i L ' i ' jtant a deputy director with the ro 'i poii i /ibil 
itioo, povsor '. , responsibilitv , pcnver, and duti e !,i ef 
ii^ a ' j ' jii . tant duL ' ctor wfe duty to ser\ e as the chief 
admmistralive assistant to the director and to 
perlbnn the luuclions of the director in his ab- 
sence. T he deputy director serves as an assistant 
secretary to the North Carolina Medicil ( are 
Commission. 



assistant secretary ot the North Carolina .Medical 
Care Commission. 

of Statutory Authority G.S. 131 A-2. 



.0205 1 1 IF .\SSlSr.\NT DIRFCI OR OF 
Bll)(;Fr AND ADMINISFRATIN E 
SERMCES 

Within the Division of Facility Services, is an 
assistant director with the responsibility for 
division-vvide oversight of the budget, contracts, 
purchasing, data processing, and other adminis- 
trative services. 

Statutory Authority G.S. I43B-I0. 

SECTION .0.300 - CONSIRl ( HON SECTION 

.0301 DESCRIPTION 

The construction section is a section within the 
Division ol Facility Ser\ices. It is located at t4w 
pnncipal addiv .' j H-f At* Di' . i ' jion t+f Facility St^^ 
vicl's "^iij Harbour F^nve etnd mamtains t4+e L . amij 
office hours from eigJit o ck^'k until live o clock 
Monday throudi Fndav. 



Statutory Authority G.S. I43B-I0. 
.020.3 Sit \n\\ I OAN I5K\N(II (KFIMM FD) 

Statutory Authority G.S. 13/- 1 21. 

.0204 11 IF \SSISI AM 1)1 RFC FOR FOR 
FA( II IIA PI ANMNC AM) 
DE\FI()PMENI 

Within the Division of Facility Services is an 
assistant director with the responsibility for ad- 
ministration of the Health Care Facilities Fi- 
nance .Act, supervision of the health resources 
development section, supervision of the certif- 
icate of need program and serving as acting di- 
rector in the absence of both the director and 
deputy director. The assistant director is also an 



Statutory Authority G.S. I43B-I0. 

.0.302 DLTIES AND RESPONSIBILITIES 

I he responsibilities pov i L ' r '. . and duties of the 
constniction section are to alti. -' miil t4* bring 1+4?*- 
quuli. ' lu ' iilth rt+ft* t** citiy.ijn -. H-t- ti+e 'i lalo t*y oon 
taillaliun V i ith de' i olopor ' j ef hoidth tww ««4 
aucial m ' . i litulioni . ttft4 by in ' jpection ef facilitiefl 
ft+f compliance ' V i ith go' i urning regulation ;. , re- 
view construction and renovation plans, inspect 
construction progress at^ spec i tic inlenals, and 
reinspect tacililies at specilic interv als to deter- 
mine compliance with the slate building code, 
lire saletv c(h1cs and other applicable rules to in- 
sure that health and s(Hial care facilities prov ide 
a safe environment for patients and residents 
served. 

Statutory Authority G S. I22C-23: J30A-5; 
131 A-4: /3/A-5: ' I3IA-'): I31D-1; 131D-2; 
I31D-I2: I3IE-S0: I31E-I03\a). 

SECTION .0400 - IIE.M III RESOLRCES 
l)F\FI OPMFNI SFCIION 

.0401 DFS(RIPIION 

1 he Riral health resources development section 
is a section within the Division ot Facility Ser- 
vices. It is located at 44^ Xr Hiinington Siri. ' L ' t. 
.101 Ashe Avenue, Raleigli, North Carolina, 
27603, and maintains tiw j. am e office hours ft* ttw 
principal addre '.'. h4 (-b<* Div i '. ion f4" Facilit; i ^nH^ 



525 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



sicLT i . from eight o'clock to rive o'clock Monday eight o clock to five o'clock \londa\ thr 
thr(HiLih I nday. 

Statutory Authority G.S. I43B-I0. 

.0402 DUTIKS AND RKSPONSI15II IFIKS 

The responsibilities poworri, and duties of the 
health resources development section are to mak e 
pnmarr houllh eetfe availabl e afhi uccooc i iblL ' to 
pLM ! ion!i v i ho rucL ' ivL ' in i. utTiciL ' iit me ' dical atton 
tH-H+ tft t+h* ■. mall towns »h4 rural ar e ai i t4' Noilh 
("arolina. assist small towns and rural areas m 
proNidiniz priinar\' health care bv assisting in the 
deselopmcnt of rural health clinics and in the 
recruitment (jf ph\ sicians and to develop the state 
medical facilities plan \o_ assist m determining the 
need for new and additional health care ser\ices 
,in Noilh Carolina. 



Stdtutoiy Authoritv 
I3ll--I77{l ): I43B-'I0. 



G.S. 1 31 £-176(25): 



SECTION .0500 - KMKRGENCV MEOK AL 
->KKMCES SECTION 

.0501 Dt S( HIPIION 

The emergency medical services section is a 
section withm the Division of facility Services, 
It is locatetl at (+h* pnncipal addroi . i . ef A^* dis i 
«**» 701 Barbour f^ri\e, Raleidi. North 
Carolina, 27603 and m;iintains t4*«» '. amo office 
hours from eight o'clock to fne o cUh k \londa\ 
throutih f'ndav. 



Statutory Authoritv G.S. 143-507; 143-508. 

.0502 DCTIES \Nn RESPONSIBILITIES 

The rcsponsit-)iliiies poworc, and duties of the 
section are to plan, implement, and maintain a 
state-wide emergency medical services system and 
to insure thai prompt, high quality emergency 
medical care is available in North Carolina 
throi.iLzh the training of emergency services per- 
sonnel, inspection of emergency \'etiicles, and 
development of a statewide emergency commu- 
nications system. 

Statutory' Aut/ioniy G.S. I3IE-I56; I3IE-I5\ 
143-509. 

SECTION .Mm I. ICENSl RESECTION 

.0601 l)ES( RIP I ION 

The licensure *h4 ccililication section is a sec- 
tion within the Division of Facility Ser\ices. it 
is located at t-kt* principiil addrch i i trf t4+e disii . ion 
7fll Barbour Drive, Raleigh, North Carolina 
27603 and maintains t4ie cam e office hours from 



l"rida\ 

Statuton^ Authority G.S. 1438-10. 

.0602 1)1 riES \ND RESPONSIHILITIES 

The responsibilities powers, and duties of the 
licensure section are to issue t4c4« licenses to all 
health and social care facilities certify facilities fof 
participation i« medicare i4h4 m e dicaid, inspect 
att jtH+H »h4 local continemcnt facilities, issue U- 
oensLV i to *W charilablo organij'.ationfl S i oliciting 
funds Ht t4+e stato, inspect aft4 register »H x ray 
lacihties. aft4 hcense aft4 inspect the storage ttft4 
i*se ef radioactii i e materials, required to be li- 
censed under the general statutes, inspect all jails 
on a semi-annual basis and issue licenses to pro- 
fessional fund raising personnel and chantable 
organizations soliciting funds in the state. 

Statutory Authority G.S. I22C. Article 2: I3IC-4: 
I3IC-IJ: I3ID-2: I3IE, Article 5; 131E, Article 
6; 13 IE. Article S: I31E, Article 10. 

.0603 SI RVE> AND CONSULTATION 

|{RAN( II (REPEALED) 
.0604 RADIAIION BRANCH (REPEALED) 

Statutotr Authority G.S. /04C-4; 122-72.6; 
1.^0 [-5. 13 1 n-/. 13IE-77; I3IE-S0; 13IE-I02; 
13 IE- 105; 13 IE- 138; I3IE-I4L 

.0605 .lAIIS AND DETENTION BRANCH 

Within the hcensure aft4 certification section is 
the jails and detention branch. It is located at the 
principal address ef Ae division 701 Barbour 
Dn\e. Raleigh, North Cart'lina 27603 and main- 
tains (+H* sam e office hours from eight o'clock to 
five o'clock Monday through f-'nday. fhc re- 
sponsibilities powers, and duties of the jail and 
detention branch arc to inspect all local confme- 
ment facilities semi-annually, aft4 to assist com 
muniticii m- planning aft4 implementing projects 
ins ' oh i ing construction ct«4 renovation ef local 
confin e ment faciliti e s. 44^ branch wfee- h*« the 
responsibility to train local confmeinenl person 
Heir to investigate all deaths occurring in jails, 
and to assist jail authonties in renovation of ex- 
isting jails and construction of new jails. 

Statutory Authoritv G.S. 131D-II to L^lD-13; 
153A-220 to h3 \-223; I53A-230.5. 

.0606 REGIONAL OFFICES (REPEALED) 

Stdtutoiy Authority G.S. I43B-I0. 
.0607 SOLICIIATION LICENSING BRANCH 



NORTH CAROLINA REGISTER 



526 



PROPOSED RULES 



Withm the licensure rt«4 CL ' ilificutuin section is 
the solicitation licensing branch. It is located at 
North 1 iLimn ' iton Street. 7(11 Barbour Drive, 



Raleigh, North Carolina, 27603 and maintains 
t4+e ■■ iini e otlice hours from eiaht o'clock to hve 
o clock, Monday llirouL:h I nda\ , a^ At» divi 
i . ion. The responsibilities po^ver ' . ' , and duties of 
the solicitation licensure br:mch are to requir e feli 
public di 'i clo '. ure «4 tact ' i, including purpo^ . t ' s ef 
fund t+H4 actual wm:' h4 fund ;. , l*¥ organi/utionL i 
VrkH+ i i olicit fund ', from t4+e public fof chiintabl e 
puqiO '. e '' : tw+d h* p i e' . fiu deccptiS ' e a«4 diohone 'i t 
MlLiiement ?. tmA conduct m tktt» solicitation trf 
fund ;. » Ae name (4f charity, license all charita- 
ble or'iani/ations who solicit funds in North 
Carolina to license fund rai^me counsels and to 
license fund raising solicitors in order to present 
decepli\'e and dishonest hiiul raising in the name 
of chantN 



Siaiutoty Authority G.S IM('-I et leq. 

.06(»S (,ROl P ( ARK I \(ll NIKS BRANCH 

\\ ithiii the licensure rm4 certif cation section is 
the group care facilities branch It is located at 
t4tt* pnncipal addre '.' j h4" tt+e division 701 Barbour 
l)n\e, R.ileiLih, North Carolina 27603 and main- 
tains t+he "anie office hours Ircim emht o'clock to 
five o'clock. \londa\ through 1 nda\ . The re- 
sponsibilities povwr; . . and duties of the group 
care facilities branch are to inspect, license, and 
ofler iirofe ..'' ional pnn'ide consultation to group 
ttttr^ dornicilian, homes and mental health facili- 
ties reciuired to be licensed Uy i . tat e ^. tatute. un- 
der the general statutes. 

Stdtuton Aialuoily G.S. 1 22C. Article 2: I3ID-2. 

.0609 MKDIC AL [•ACII.HIKS LICENSURE 
liR V\(il 

Within I he licensure section is the medical fa- 
cilities licensure branch. It is located at 701 
Barbour Dn\e. Raleigli, North Carolina 2'7603 
and maintains office hours from eight o'clock to 
five o'clock, Monday througli Friday. The re- 
sponsibilities and duties of the medical facilities 
licensure branch are to inspect and license the 
health and social care facilities and services which 
require licensure under the general statutes. 

Statutory Authoritv G.S. I3IE, Article 5: 131 E. 
Article h. I3li:. .Irticle S; I3IE. Article 10 

.0610 REGIONAL OELICES 

\\'ithin the Division of Facility Services is lo- 
cated the Black Mountain regional office. I he 
Black .Mountain regional office houses staff from 
the licensure section, medicare medicaid section 



and the emergency medical ser\ices section. The 
section staff are located as follows: 

Building 14 - emergency medical services 
Buildings 1 5 and 22 - medicaje/medicaid 
section 

Building 16 - licensure section - 
Building 17 - medical re\iew branch 
All offices in Black Mountain maintain office 
hours from eight o'clock to five o'clock, Monday 
through I nday. The responsible officials in the 
regional olfice are the regional supervisors for 
emergenc) medical services, licensure, and 
medicare medicaid. The responsibilities and du- 
ties of the regional office are to inspect, certify, 
and license health and social care facilities and 
services in the regional area. 

Statutory Authority G.S. 1 43 B- JO. 

SEC I ION .0700 - NORTH CAROLINA MEDICAL 
CAKE COMMISSION 

.0701 OESCRIPTION (REPEALED) 
.0702 RESPONSIBILITIES AND DUTIES 

(REPEALED) 
.070.? EXECLTH E COMMITTEE (REPEALED) 

Sidtuiory Authority G.S. I43B-I65. 

SK HON .0800 - CERIIEICAIION SECI ION 

.0801 DE-S( RIPIION 

The certification section is a section withm the 
Division of Facility Services. It is located at 701 
Barbour Drive, Raleigh, North Carolina 27603 
and maintains office hours from eight o'clock to 
fi\'e o'clock, .Monday through Fnday. 

Statutory Authority G.S. I43B-I0. 

.0802 DITIES AND RESPONSIBILITIES 

The responsibilities and duties of the certit- 
ication section are to certify health care facilities 
and services for participation in the federal med- 
icare and state medicaid programs and to perform 
patient care reviews under the medicaid program. 

Statutor\ Authority G.S. 42 L'.S.C. 1302. 

.080.^ \1EDI( ARE-MEDK AID CERTIFICATION 
BR\N( II 

Withm the certification section is the medicarc- 
medlcaid certification branch. It is located at 701 
Barbour Drive, Raleigh, North Carolina 27603 
and maintains office hours from eiglit o'clock to 
five o'clock, Monday through Friday. The re- 
sponsibilities and duties of the medicare-medicaid 
certification branch are to inspect and certify 
health care facilities and ser\'ices for participation 



527 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



in the federal medicare and state medicaid pro- 
grams. 

Statutofj Aulhoniy 42 U.S.C. 1302. 

.0804 MKOICAI. REVIEW BRANCH 

Within the certification section is the medical 
review branch. It is located at Biggs Avenue, 
Raleigli, North Carolina 27603 and maintains 
office hours from eight o'clock to five o'clock, 
Monday througli Iriday. The responsibilities 
and duties of the medical review branch are to 
review the le\el of care provided patients in 
nursing homes supported under the medicaid 
program. 

Statutory Aulhoniy 42 U.S.C. J 302. 

SEcnoN .0900 - R.\ni.\rio\ prote( iion 

SECTION 

.0901 DESCKII'IION 

The radiation protection section is a scctiim 
within the Di\ision of lacility Services. It is lo- 
cated at 701 Barbour Drive, Raleigh, North 
Carolina 27603 and maintains office hours from 
eight o clock to five o'clock, Monday through 
I'riday. 

Statuioiy Authority G.S. I04E-6. 

.0902 1)1 1 lES AM) RESPONSIBILITIES 

The responsibihties and duties of the radiation 
protection section are to inspect and register x- 
ray facilities, to license the storage and use of ra- 
dioactive materials, to analyze environmental 
samples for radioacti\ity levels and to mamtain 
a radiological emergency response team from the 
state. 

Statuion .luthority G.S. I04E-9; I04F.-I0.I: 
l04l-:-li. 1 04 1:- 1 4: I04E-I5: I04E-I7. 

SE( I ION .1000 - CERTIKICAI E OF NEED 
SEC1ION 

.1001 DESCRII'IION 

The certificate of need section is a section within 
the Division of 1 acility Ser\ices. It is located at 
701 Barbour Dn\c, Raleigh, North CaroUna 
27603 and maintains office hours from eight 
o'clock to five o'clock, Monday through Friday. 

Statutoty Authority G.S. I3IE-I77. 

.1002 1)1 IIES .\ND RESPONSIBILITIES 

The duties and responsibilities of the certificate 
of need section arc to accept, review, and approve 
applications for new or additions to health care 



facilities, equipment or ser\'ices as required under 
rules and statute. 

Statutory Authority G.S. I3IE-I77. 

SECTION .1 100 - CHILD DAY CARE SECIION 

.1101 DESCRIPTION 

The child day care section is a section within the 
Division of Facility Services. It is located at 701 
Barbour Drive, Raleigh, North ("arohna 27603 
and maintains office hours from eight o'clock to 
five o'clock, Monday through Friday. 

Statutory Authority G.S. J43B-/6S.3. 

.1102 DUTIES AND RESPONSIBILITIES 

The duties and responsibilities of the cliild day 
care section are to inspect and hcense child day 
care facilities and to administer the purchase of 
care programs. 



Statutory Authority 
I43B-I53. 



G.S. 110-90: 110-105: 



SECTION .1200 - NORTH CAROLINA MEDICAL 
CARE COMMISSION 

.1201 DKSCRIPIION 

Within the Di\ision of Facility Services is the 
North Carolina Medical Care Commission. It 
is located at 701 Barbour Drive, Raleigh, North 
Carolina 27603 and maintains office hours from 
eight o'clock to live o'clock, Monday through 
Friday. 

Statutory Authority i^.S. I43B-J65. 

.1202 RESPONSIHII HIES AND DL TIES 

The responsibilities and duties of the North 
Carolina Medical Care Commission are: 

(1) To adopt rules for the construction and 
maintenance of hospitals, public health cen- 
ters and related facihties and to receive and 
administer funds which may be provided by 
the General Assembly and the federal gov- 
ernment (G.S. 13 IE, Article 4). 

(2) To adopt rules for the allocation, appor- 
tionment, and granting of funds made avail- 
able b\ the state for grants-m-aid to 
counties, cities, towns, and subdivisions of 
government to acquire real estate and con- 
struct hospital facilities (G.S. 13 IE, Article 

(3) 'I o approve grant-in-aid trom funds sup- 
plied by the federal and state governments 
for the planning of hospitals and other re- 
lated medical facilities (G.S. 13 IF', Article 
4). 



NORTH CAROUNA REGISTER 



52S 



PROPOSED Rl'LES 



(4) To cam out and effectuate the purposes 
and pnniMons of the Health Care facilities 
Finance Au (Ci.S. 131 A). 

(5) lo adopt rules for the licensure of hospi- 
tals under the pro\isions of the Hospital 
I icensurc Act (G.S. 1311-, Article 5). 

(6) To adopt, amend, and repeal all rules nec- 
essary for the implementation of the Nursing 
Home licensure Act (G.S. 13 IF, Article 6, 
Part /\). 

(7) lo adopt, amend, and repeal all rules nec- 
essarv for the implementation of the Home 
Health Agenc\ Licensure Act (G.S. 131E. 
Article 6, Pan C). 

(8) lo adopt, amend, and repeal all rules nec- 
essary for the implementation of the 
Amhulatop,' Surgical Facility Licensure .\ct 
((j S 1311-', Article h. Part D). 

C^)) I o adopt rules specitying equipment, sem- 
itation, supply, and design requirements for 
ambulances and for certification of emer- 
i;enc\' medical personnel (G.S. 13 IE, Article 
7) 

(10) 1 o adopt rules for the licensing and regu- 
lation ot hosjiices pursuant to the Hospice 
1 icensure Act (G.S. 13 IF, Article 10). 

(11) lo carT\ out provisions ot the Hospital 
nistnci Act ((.j.S. 131F, i'art C) 

(12) lo adopt. ;unend, and repeal all rules 
necessaiA for the certUlcation ot abortion 
clinics ((i.S. 14-4.S.1). 

Statutory Authonty G.S. I4JB-/65. 

.1203 K.\E( I 11\K ( OMMII IKK 

(a) Iherc shall be an exeeutne committee ot 
the North Carolina .Medical ("arc Commission 
composed of five members ot the commission in 
addition to the chairman and \ice-chairman of 
the commission. Three members shall be ap- 
pointed by a \ote of the commission at the De- 
cember meeting of each odd year and two 
members shall be appointed by the chairman of 
the commission at the December meeting of each 
even year. No member of the executive com- 
mittee, e.\cept the chainnan and vice-chairman, 
shall ser\c more than two two-year tenns in 
succession, Ihe chairman and vice-chairman of 
the commission shall also be chaimian and \ice- 
chainnan of the executive committee. 

(b) The functions of the executive committee 
shall be to: 

(1) transact business in behalt of the com- 
mission, consistent with established pol- 
icy, which in the opinitm of the chairman 
is of such urgency that action is required 
before the next regularls scheduled com- 
mission meeting and tlie impact of the 



action would not justif) the con\ening of 
a special meeting of the commission; 

(2) transact business in behalf of the com- 
mission when a quorum is not obtained 
at any commission meeting for vshich 
prior notice of at least ten da) s has been 
given; 

(3) re\iew periodically the acti\-ities of the 
commission and the assignments and rec- 
ommendations of the \ arious committees 
for the purpose of de\elopLng pohcy rec- 
ommendations for commission consider- 
ation. 

(c) All actions of the executive committee shall 
be re\iewed at the next commission meeting and 
if disagreement is expressed b_\' a simple majonty 
of the members present and voting at any com- 
mission meeting in which a quorum is present, 
the functions of the executive committee shall be 
suspended until resohcd by later action of the 
commission. 

(d) The initial approval of all projects under the 
Health Care Facihties Finance Act must be given 
by a quorum of the full commission. 

(e) A quorum of the exccuti\e committee shall 
consist of at least four members of the executive 
committee. 

Siuiiiinty Authority G.S. /43B-J65; I43B-I66. 

SLBCHAITKR M< ( KK IM ICM K Ol NKKD 
RK(,l I AIIONS 

SECTION .1000 - SPK( lAK C RKI KRI.A AND 
S lANDARDS: IN (;KNKRAL 



.KtO.H 

(a) 

Facilit 
tion: 

(1) 



(2) 
(3) 



(4) 



S I ATE MKDICAL FACILIIIKS PI AN 

Ihe W«* North Carolina State Medical 
les Plan contains the following informa- 

inventor)' of certain categories of inpatient 
and outpatient health care facihties, in- 
cluding number of beds and utilization of 
such; 

type of services pro\ ided h\ each category' 
of health care facility; 
projections of need for acute care hospital 
(including rehabihtation sen.ices), long- 
term care facilities (including nursing 
homes, home health agencies, and hospice 
inpatient facihties), mental health facilities 
and end stage renal dialysis services for 
\arious geographical areas of the state; 
statement of policies related to acute care 
facilities, rehabilitation services, long-term 
care, psychiatric facilities, chemical de- 
pendency facilities, and facilities for mter- 
mediate care for the mentally retarded, 
which are used with other criteria con- 



529 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



cilitiL> 



t>iincd in this Subchapter and in CJ.S. 

I M I - 1 N.^ and need projections to deter- 
miiK' whether applications proposing ad- 
ditional beds and services of these types 
ina\ be appro\ed under the certificate of 
need proinam. 
Mk annu.ilK published State Medical Fa- 

I'Liii .i| piowd b\ the Cjo\emor, and any 



duh .idopled ,iiii. iKlments or additions lluTCto. 
IS hereb\ adopted l_>v reference as a nile tor the 
calendar year dunlin; which it is in efkvl. 

f4»-)- (£| i'his plan can be obtained from the Di- 
\ision of 1 ai.ilil\ Ser\'iees, 7(11 iiarhour Hnve, 
Raleiuh. North Carolina, at a cost of forty dollars 
($40.(H)) per cop\ . This plan is also a\ailablc for 
inspection at the Division of lacililv Ser\ices. 

Siatuton Auihoriiv G.S /3/[:-/~6('25 ): 
/3/[:-/7''(I >: I3IE-IS3{I): 42 L SC. 300K-2. 

■k-k-k-k-k-k-k-k-k-k-k-k-k-k**** 



No 



otice is hereby given in accordance with G.S. 
I50B-I2 that the Director of the Dh'ision of Men- 
tal Health. Mental Retardation and Substance 
Abuse Senicc'' intends to amend rule(s) cited 
as 10 SCAC NC .1)704. .0709. and 10 AC.IC 
ISA .0131 



Tk 



he proposed c!le< live date of this action is 
.lanuary I. 19S9 

1 he public hearing will be condin icd at 10 00 
a.m. on October 17, 19SS at Dorothea Di.x Hos- 
pital, S20 South Boy Ian Avenue, .Administration 
Building - Taylor Hall, Personnel ( 'on/erence 
Room Sumber 16, Raleigh, N.C. 2^603. 

K^ommcnl Procedures: .iny interested person 
may present his; her comments by oral presentation 
or by submitting a written statement. Persons 
wishing to make oral presentations should contact: 
Jan Warren, Division of Menial Health, Mental 
Retardation and Substance Abuse Seriica, 325 
.\. Salishwy St., Raleigh, A'.C. 27611, (919) 
733-7971 by October 14, 1988. Written comments 
must be sent to the above address. The hearing 
record will remain open for written comments 
from September 15, 1988 through October H, 
1988. I'iscal injormation on these ndcs or further 
directions to norothea Di.x llinpital is also inail- 
able from tiic uimc address. 

( IIAPTFR 14 - MKNTAI, UK ALTIl: GKNFRAL 

SI lUIIAI'IKK I4t -CKNKKAI. RILES 



SK HON .0700 - Rll KS (;()\ IRMNC, 

DKI'OR I MKN T: IRAKI IC: I'ARKINC AND 

RK(a LAIION OF \KIIK KKS AF DIMSION 

INS FlTLl IONS 

.0704 IMRPOSE 

I he purpose of Rules .0704 througli .0716 in 
tliis Section is to establish specific procedures 
go' . tfming which may be implemented in order 
to eovem tratfic, parking, registration of motor 
\ehicles. and the deportment of individuals or 
giDups of individuals on the grounds of division 
institutions. These procedures are supplemental 
to G.S. 14-132 and the statewide motor vehicle 
laws in Chapter 20 of the General Statutes which 
are applicable on the grounds of division insti- 
tutions. 

Statutory Authority G.S. 143-116.6; 143-116.7. 

.0709 VKIIICLK RKGLS1RAFION 

(a) If the institution director elects to require 
vehicle registration, each vehicle used or parked 
on institutional propcrt\' b\ employees shall 
must be registered and ^hall must display an of- 
ficial sticker. Newcomers to the institutional 
statf shall display an official sticker uithin 48 
hours of beginning employment, excluding holi- 
da\s and weekends. For the purposes of the 
rules in this Section, "employees" shall include 
tho>e persons who have assigned work stations 
on ihe grounds of the institution. Bonaiide visi- 
tor^ to the institution are exempt from \eliicle 
registration requirements. Students and trainees 
shall register their vehicles and display an official 
temporary permit valid up to 90 days. 

f4*^ 44*^ n?gi ' , i tnition ■. ticker j. hull be mountod 
fH+ t+w W4- hand 44t» ef t4w Fe«* bumper ef Ae 
'n .' hicle m- ;. uch a mannor a* te- be clearly ' i ioiblo 
upiMi approaching t4w Feaf ef Ae vehiclij. Tke 
tomporaP f' permit L . liall be di '. played m tl*e lower 
left haiid M4e t4 Ae lerw ' ■ ' ■ indow. 

(b) The registration sticker or temporar\ permit 
shall be displayed i_n such manner as designated 
by the institution director. 

(j) Registration stickers ' ihall may be issued to 
be valid for a period of up to three years dating 
from t-be 4rrte ef t4*e facility V i ido ir . fiue. There 
shall be a charge ei" tme dt4lrtf ($1.00) each k»- 
tbe original regi '. tration sticker a«4 ©He dollar 
($1.00) tw each additional t*f replaCL ' m e nt regis 
tration '. ticker, tor each .sticker sufficient to de- 
frav the co.st of its issuance. 



Staiutoty Authority G.S. 143-1 16.7. 



(II U'FKR 18 - MENTAL HFAI LII: OTHER 
PROGR.VMS 



NORTH CAROLIN.A REOISTER 



530 



PROPOSED RULES 



SI BniAPIKR IXA - MOM rOKING 
rK()( FDl KKS 

SFX HON .0100 - KFMKW I'KOCFSS I OK AKK \ 

l'KO(,KAMS AM) rilKIK C OM KAC 1 

A(;K,N(IKS 

.GUI ON-SI IK \ Al IOATION RKMKWS 

(a) I'.ach _\ear the duision director shall select 
a miniimim of VI si* area programs from vviihiii 
t+K* Stal e tor rt+v on-site \aHdation re\'ie\v. pnie 

V al i di i i i on i i hiill occur tolloi . simi t+n* 



• jAi ' A\x\ c " i' l*y *14- »*«»«• program '' v . iihin h rt ' iiion 
'. ch e dul c' d fet* i .e lf • iirvc ' v t4+i*t- lir . ccil ' . car. .Area 



program manaizement and A a ^tratlfied sample 
ot all components of the selected area programs 
shall be re\ie\\ed. 

Stdiuton Auihoritv OS i22C-ll3: 

l22C-l4l,hr l22C-l42{ai: 1 22C- l<)l (d). 



1\ oticc is hereby gh'en in accordatue with (iS. 
/50B-/2 that the Social Seniccs Commission in- 
tends to adopt, amend ndefs) cited as 10 }() 
.0214: 42C .2007, .240/; 49B .0304 and .0306. 



Th 



he pioposed 
Januan I. 19S9. 



:ffecti\-e date of this action is 



Th 



he public hearing will be conducted al 10:00 
a.m. on October 19, I98S at .ilbemarle Building, 
Director s Conference Room. 8th I'loor - Room 
S64, 32.=) A Salisbury St., Raleigh, \.C. 276/1. 

\^ o/n/nen! Procedures: Any interested person 
may present his her vie^-s and comments either in 
writing or orally at the hearing, .{nv person mav 
request injurmaiion. permission to be heard or 
copies of the proposed regulations by writing or 
caUins. Bonnie .Hired. 325 N. Salisbury Street. 
Raleii;h, .\.C. 27611. 9l9-:'33-3055. 



CHAITKK M) - I OOI) ASSISI ANCt 
SKCIION .0200 - M.\M Al. 

.0214 AnnnioNAi. mand.viokv 

NKKII ICAIIONS 

fa) The county depaitment will \erify house- 
hold si/e. A'eritication will be accomplished 
through a collateral contact or readily available 
documentary- evidence. .A collateral contact is 
defined as a verbal confinnation of a household's 



circumstances by someone outside the house- 
hold, such as employees, landU)rds. neiglibtjrs, 
etc. ,\ collateral contact may be made in person 
or by telephone. 

(b) The county department will \'enfy that the 
household actually incurs a major utility expense. 
Verification is required on a one-time basis unless 
the household has moved or changed its utilities 
or unless questionable. 

(c) The county departinent will check Property 
Tax Listings at initial application and once every 
twelve months thereal'ter. 

(d| The county department will check the 
DMV lifting Division of Motor Vehicles (DMV) 
file for licensed \ehicles at initial application and 
at each subsequent rccertification. not to exceed 
once s uch three months. e\er\ six months. 

Statutoty Authority G.S. lOSA-SI; I43B-I53. 

CIIAPIKR 42 IM)I\ mi Al AM) F.VMILY 
-SI PPOKT 

SLBCIIAPTER 42C - LICENSING OF F.VMILV 
CARF HOMES 

SEC TION .2000 - PERSONNEL 

.2007 Ql \l IFICATIONS OF PERSONAL 
(ARE S FAFF 

fiach aide, administrator, and super^isor-in- 
charge, who pro\ides personal care to residents 
in family care homes and homes for the aged and 
disabled, who is hired after January 1, 19S9 to 
work in a home arid who does not ha\e six 
months experience shall have successfully com- 
pleted an aide training program appro\ed by the 
Department of Human Resources, Domiciliar)' 
Home Personnel Policies Re\iew Committee. 
When an indi\idual has not already successfully 
completed an approved aide training program, 
he she shall enroll in the first a\ailable approved 
aide training program which is scheduled to 
commence v\ ithm 60 days of the date of his her 
empKnment. The program may be established 
b> the home or by an organization or educational 
institutuin and taught by the administration, 
super\isor-in-charge, other qualified staff, or by 
an org.mi/ation or educational institution. The 
licensed home shaU pro\ide a planned orientation 
within the first week of employment for all per- 
sonal care staff hired after Januar\' 1. I'^S^ em- 
phasizing resident care policies and procedures, 
the home's philosophy and goals, and staff per- 
formance expectations. 

The aid training program shall consist of at least 
the following: 

(ll Twenty hours of classroom instruction to 
commence within 60 da\'s ot emplo_\inent. 



5.^/ 



NORTH CAROLINA REGLSTER 



PROPOSED RULES 



I he instiTJction shall include the individual's 
duties, basic personal care skills, resident 
safety and rights, the social and psycholog- 
ical aspects of aging, interaction with fami- 
lies, the importance of activities and social 
services, and death and dymg. The 20 hours 
of classroom instruction shall be completed 
within the first 120 days of employment. 

(2) Forty hours of supervised training. These 
hours shall consist of an appropriately 
supervised work assignment and shall com- 
mence upon employment. The 40 hours of 
supervised training shall be completed 
within the first 120 days of employment. 

(3) Proof of successful completion of training 
shall be retained in the home's records, and 
shall be available for inspection. 

Slatulory Aiiihonty G.S. I3ID-2: 143B-I53. 

SK HON .2400- ADMLSSION POLICIES 

.2401 AilMISSIONS 

(a) ,Vn> adult (18 years of age or over) who, 
because of a temporary or chronic physical con- 
dition or mental disability, needs a substitute 
home may be admitted when, in the opinion of 
the resident, physician, family or social worker, 
and the adnumstrator the services and accom- 
modations of the home will meet his particular 
needs. 

(b) lixceptions. People are not to be admitted: 

(1) for treatment of mental illness, or alcohol 
or dnig abuse; 

(2) for maternity care; 

(3) for professional nursing care under con- 
tinuous medical supervision; 

(4) for lodging, when the personal assistance 
and supervision offered for the aged and 
disabled are not needed; or 

(5) with disease in a communicable stage or 
carrier state. This provision does not 
proliibit the admission of residents who 
are hepatitis B carriers to a home operated 
by a contract agency of an area mental 
health, mental retardation and substance 
abuse program if the home is in compli- 
ance wiih the rules codified in 10 NC.'AC 
1811 (11(17 through .0115. Copies of the 
rules in 10 NCAC 181 1 .0107 througli 
.0115 may be obtained at no cost by 
writing; Publications Officer, Division of 
Mental Health, Mental Retardation and 
Substance Abuse Services, 325 N. 
Salisbury Street, Raleigh, North Carolina 
27611. The Division of Facility Services 
may accept documentation submitted to 
county departments of social services by 



area mental health, mental retardation and 
substance abuse programs as evidence that 
the home is in compliance with 10 NCAC 
18H .0107 through .0115. I nless t_he 
Communicable Disease Control Measures 
(10 NCAC 7A .0200) require restnction, 
this provision does not prohibit the ad- 
mission of individuals with IIIV infection 
to a home which has estatilished throuuli 



its written admission policies that it is 
operated solely lor the benefit of residents 
with HIV infection and wliich is following 
infection control measures outlined in the 
"Division of Health Ser\iccs (iuidelines 



for Handline Bodv Fluids 



The admin- 



istrator IS responsible for estab 



written procedures for implementing the 
infection control measures. Documenta- 
tion that the procedures ha\e been re- 
viewed and approved bv a qualified health 
care profcsMonal in pn\ate practice or in 
the public health department must be on 
file in the home and a\ ailable for in- 
spection by the monitonng and licensing 
agencies. Copies of the rules in U] NCAC 
7A .020*-^ and the infection control guide- 



lines may be obtained at_ no cost by writ 
inii the Division of I lealth Services 



-S, 



(Communicable Disease Control Branch, 



225 N. .McDowell Street. Raleigh. N. ^ 
27602. 

Statuuny Authority G. S. I3ID-2: 143B-1S3. 

Cn.\PTF.R 49 - AFDC 

SLBCMArTER 49B KFIGIHILITY 
DFTERMINAIION 

SECTION .0300 - ELIGIBILITY FACTORS 

.0304 KINSHIP AND LIVING WHII A 
SPEC H lED RELATIVE 

(a) Eligibility requirements pertaining to 
kinship and living with a specified relative shall 
be found in 45 CFR 233.90 and this provision is 
hereby adopted by reference under G.S. 
I50B-I4(c). 

(b) Verification of kinship shall be made only 
at application unless previous documentation 
appears to be incorrect. 

(1) Kinship of a child to a specified relative 
except for an alleged father shall be veri- 
fied by examining; 

(A) birth certificates; or 

(B) hospital records estabhshed at birth; or 

(C) marriage record; or 

(D) Social Security Administration records; 
or 



NORTH CAROLINA REGISTER 



5.U 



PROPOSED RULES 



(II) two of the following: 

(i) N(. liool records; 

(li) ISihle records; 

(iu) hospital or physician's records; 

(iv) court records including adoption re- 
cords. 

(\ ) immigration records; 

(\i) naturalization records; 

(\"ii) church documents; 

(\iiij passport; 

(ix) militarv' records; 

(X) l, S. census records; 

(xi) signed statement from an individual 
hasing specific knowledge about the 
kinship of the child to the specified rel- 
ative. The statement shall include: 

(I) name of child; 

(II) date of birth; 

(III) place of birth; 

(I\') indiNidual's relationship: and 
(\') basis of indi\idual's knowledge 
(2) Kinship of a child to his alleged father or 
other alleged paternal relati\'e shall be 
verified by verifying the child's relation- 
ship to the alleged father and if necessan.' 
the alleged father's relationship to the al- 
leged paternal relati\'e. Relation to the 
alleged father shall be Ncrified h\ examin- 
ing: 

(A) court support records: or 

(B) county department of social ser\ices 
support records: or 

(C) statement signed and dated by the fa- 
ther that acknowledges liis paternity; or 

(D) two of the following: 
(i) school records; 

(ii) Bible records; 

(iii) hospital or physician records; 

(iv) court records: 

(\") immigration records; 

(\i) naturalization records; 

(\ii) church documents; 

(\iii) passport; 

(ix) military' records; 

(x) U. S. census records; 

(xi) signed statement from an individual 
ha\ing specific knowledge about the 
kinship of the child to the specified rel- 
ative. The statement shall include: 

(I) name of child; 

(II) date of birth; 

(III) place of birth; 

(IV) indi\idual's relationship; and 
iX) basis of mdividual's knowledge. 

(c) \'enJlcation that a child is living within the 
home of a specified relative shall be made during 
each detemiination of eliabilitv bv: 



(1) a home \isit when there is evidence of the 
child liMiig in the home; t)r 

(2) use of school records; or 

(3) use of da> care center records; or 

(4) statement of a social worker employed by 
the county department of social services 
when, following a home \'isit, he is able 
to substantiate that the child is living in 
the home, or 

(5) statement from a non-relative haviniz per- 
sonal knowledge q\_ the child living with 
the specifiL-d relative: or 

(6) <-^ two ot the following: 

(A) medical records, including health de- 
partment records; 

(B) Social Securitv or other benefit records; 

(C) rental records: 

(D) church records. 

fftl f i ignod stat e m^'nt ' - i from non rolntivL"' . 
hasmg p>. ' ri: . onal knuv . lL ' dao ef t4*t» child 
li' i ing ¥r+t4* Ae opecifiod rolatii i O. 

Auihontv G S^ /08A-23: I43B-I53: 45 C.F.R. 
233.10. 

.0306 nhPRI\AriON 

I-iigibiliiv requirements pertaimng to depri- 
vation shall be found in 45 CFR 233.90 and this 
provision is hereby adopted bv reference under 
G.S. L'iOB- 14(c). 

( 1 ) ncatli of either parent: The death of either 
parent shall be established through the use 
of the following: 

(a) death certificate; 

lb) wntten notice from the Bureau of Vital 
Statistics or a county health department; 

(c) SSA or VA records; 

(d) militan,' records: 

(e) cemetery records; 

(f) hospital records; 

(g) insurance company records; 

(h) records of a fratem;d organization; 
(i) obituarv : 

(j) ' jigned statement from an indi\idual know- 
ledgeable about the death. 

(2) Physical or mental incapacity of parent: 
(a) Incapacity shall be established througli the 

use of the follow ing: 

(i) a medical examination of the incapaci- 
tated parent, or a medical report from a 
medical facility; or 

(ii) verification that Social Secunty disabil- 
ity benefits or SSI disability benefits are 
being received; or 

(iii) a psychological examination; and 

(iv) an examination of pertinent social fac- 
tors. 



533 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



(b) lixcept for cases approved because Social 
Security disability or SSI disability bene- 
fits are being received by the incapacitated 
parent, a social history shall be completed. 

(c) The decision on incapacity shall be made 
by the county department of social ser- 
vices where possible. If not, the required 
information shall be forwarded to the 
Disability Determination Section of the 
Division of Social Services for evaluation; 

(3) Continued absence of parent. Verification 
shall be accomplished as follows: 

(a) Divorce: 

(i) use legal documents in the applicant's/ 

recipient's possession; or 
(ii) use court records; or 
(iii) contact the attorney who handled the 

divorce; 
(iv) at reviews, a collateral statement shall 

be obtained to show that the parents are 

not living together. 

(b) F'ormal or legal separation; 

(i) use legal documents in the applicant's/ 

recipient's possession; or 
(ii) use court records; or 
(iii) contact the attorney who handled the 

divorce; 
(iv) at reviews, a collateral statement shall 

be obtained to show that the parents are 

not living together. 

(c) Inlbnnal separation; obtain a statement 
Dtutomont '. from twe one non-relative 
collateral, collateral - i 

(d) Desertion or abandonment; obtain a 
statement i i tutomonti i from Uvo one non- 
relative collateral, collut e' nils 

(e) Long-term treatment in a hospital, skilled 
nursing or domiciliary care facility; the 
county department shall contact the facil- 
ity to obtain a statement. 

(f) Institutionalization; the county department 

shall contact the institution to obtain a 
statement. 

(g) Incarceration: 

(i) use court records; or 
(ii) use penal institution records; or 
(iii) obtain statement of police officer, 
(h) A parent who is a convicted offender per- 
mitted by the court to live at home while 
serving an active court sentence to per- 
form unpaid public work or unpaid com- 
munity service during working hours; the 
county department shall contact the clerk 
of court to obtain statement that includes 
name of person con\icted, date of sen- 
tence, and district of Superior Court in 
which the sentence was given. 



(i) The man in the home acknowledges 
paternity; the county department obtains 
a statement from the alleged father which 
indicates that he is the father of the cliild. 

Authority G.S. /08A-25; I43B-I53; 45 C.F.R. 
233.90. 

TITLE 1 1 - DEPARTMENT OF 
INSURANCE 

1\ otice is hereby gi\'en in accordance with G.S. 
I SOB- 1 2 that the Department of Insurance intends 
to adopt rules cited as II NCAC 12 .0322, .0323, 
.0324, .0554, .0555, .0556. .0557, .0558, .0701, 
.0702, .0703, .0704. .0705, .0706, .0707, .0708. 
.0709. .0710, .0711; amend rules cited as II 
NCAC 12 .0101, .0307, .0308, .0312, .0407, .0420, 
.0421. .0424, .0427, .0428, .0429. .0431, .0436, 
0441, .0446, .0447, .0504. .0514, .0543, .0544, 
.0551, .0604, .0605, .0607, .0608, .0609 and repeal 
rules cited as II NCAC 12 .0102, .0103, .0301, 
.0302, .0311. .0314, .0315, .0316, .0401. .0417. 
.0418, .0444. .0451, .0457, .0502. .0505, .0515, 
and .0547. 

I he proposed effective date of this action is 
January I. 1989. ' 

1 he public hearing will be conducted at 10:00 
a.m. on October 17, 1988 at Room 4085. 4th floor 
Conference Room, Dobbs Building, 430 N. 
Salisbury Street, Raleigh, N.C. 2761 1. 

\^ omment Procedures: Written comments may 
be sent to Leonard Wood, Life, Accident & 
Health Division, P. O. Box 26387. Raleigh, N.C. 
27611. Oral presentations may be made at the 
public hearing. Anyone having questions should 
call Leonard Wood at (919) 733-5060. 

CHAPTER 12 - LIFE: ACCIDENT AND HEALTH 
DIVISION 

SECTION .0100 - GENERAL ORGANIZATION 
AND FLNCTIONS 

.0101 GENERAL PROVISIONS 

In this Chapter, unless the context otherwise 
requires: 

(1) "Decmer clause" or "deemcr provision" 
shall mean any clause or provision which 
estabhshes a period of time certain, e.g. ^ 
days, 20 days, etc., within which time the 
commissioner must disapprove a particular 
matter before him or set a hearing and which 
if no action is taken by the commissioner 



NORTH CAROLINA REGISTER 



5.U 



PROPOSED RULES 



within the period oJ time certain, said matter 
before the commissioner is deemed ap- 
proved. 

(2) "Division" shaU mean the life, accident and 
hcahh division of the North Carolina De- 
partment of Insurance. 

(3) "I'omi" shall consist of but not be limited 
to the application, rider, certificate, policy, 
etc. 

Statuion' Auihpritx G.S. 58-9: 5S-54; 58-254.7; 
58-34''. ' 

.0102 PI KPOSF, OF DIMSION (REPEALED) 
.0103 PERSONNEL OF DIXLSION (REPE.\LED) 

Staliuory .iuthority G.S. 58-4; 58-9. 

SECTION .0300 - (.ENER AL PROVISIONS 
.0.101 GENERAL PROMSIONS (REPEALED) 

Statutoiy .-iuthority G.S. 58-9. 

.0302 APPLICATION FOR INSLRANCE 
REQL IRED (REPEALED) 

Stiiluioiy .iuthority G.S. 58-44. 

.0307 FILING APPRO\ AL: LIFE: 

A( CIDKNI AND IIEALIII FORMS 

(a) Ail life, accident and health forms must be 
filed with and approved by the commissioner 
before use. 

(b) The following procedure should be used in 
fjlinp life and accident and health forms for ap- 
proval by this department: 

i'lling letter should be submitted in dupli- 
cate; list forms by number and descriptive 
title: indicate if new and briefly describe 
use of form; if revision identify fonn being 
replaced by number and approval date; 

If riders, endorsements or certificates are 
filed separately, indicate poUcy forms with 
which they are used; 

Only one copy of the form is required to 
be submitted unless the company desires 
a stamped copy; 

i\l\ forms should be completed with spec- 
imen data; 

Rates b\' age and mode of payment c i hould 
bt» attached k> each form requiring » pw- 
miiim: including the actuarud memoran- 
dum should be attached to each fonn 
requinniz a premium. 

Sut")mit evidence of appro\al of subject 
identical filinsz bv the state of domicile; 



(1) 

(2) 
(3) 

(4) 
(5 1 

(6) 



(7) Submit a listing of states in which subject 
identical filing has been submitted and a 
hsting of states which have: 

(A) approved; or 

(B) disapproved, including the reasons for 
disapproval; 

Submit copies of any endorsements, riders 
or changes in subject filing required by 
any jurisdiction as a condition of ap- 
pro\al; 

Subparagraphs (6), (7), and (8) of this 
Paragraph shall not be applicable to do- 



(8) 



(9) 



mestic insurers. 



Statutor\> .Auihoritv 
58- 195;' 58-249. 



G.S. 57-1; 57-4; 58-9; 



.0308 BANK CREDIT CARD FACILITY 
A\ AILABLE FOR PREMILM 
PAYMENT 

No insurer may soUcit insurance under the pro- 
visions of G.S. 58-61.2 in such a way as to imply 
that the bank credit card facility is actually doing 
the solicitation. The following guidelines must 
be adhered to, by the insurer: 

(1) The colors used by the bank credit card fa- 
cility may not be used in the solicitation 
material. 

(2) rhe solicitation material ma\- refer to the 
bank credit card facilit\' if it is operated by a 
bank corporation with pnncipal domicile in 
North Carolina, only by making it one of 
the options to be used in paying the pre- 
mium. 

(3) The bank credit card account number may 
not be shown on the address label of the 
individual being solicited. 

(4) With respect to the physical location w'here 
solicitations arc conducted, solicitations and 
disclosures should not possess a capacity or 
tendency to mislead or deceive as to the tnie 
identity of the insurer or create the im- 
pression that a companN' other than the 
insurer would ha\"c an\' rcsponsihililN tor the 
financial obligation under a contract of in- 
surance. 

Stalutorj- .Authority G.S. 58-61.2. 

.031 1 LIMITA FION ON AMOLNT OF 
C REDIT INSLRANCE \\ KITTEN 
(REPEALED) 

Statuto/T .iuthority G.S. 57-1; 57-4; 58-9; 
58-344. ' 

.0312 ACCIDENTAL DE.\TH BENEFIT: 
INHALATION OF CAS: ETC. 



535 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



A policy or rider providing benefits for acci- 
dental death may not exclude the involuntary 
inhalation of gas and fumes and involuntary tak- 
ing of poison. Nor may \\_ exclude accidental 
death as a result o| in\oluntar\" exposure to nu- 
clear explosion, nuclear enerij\' or nuclear ele- 
ments. 

Statutory Authority G.S. 5S-9( I ). 

.0314 INSl RKR I lABII.ITV: i'RF.MILM 

ACCKITKO FROM INKLIGIBLE 

DKH FOR (RFPF.\LED) 
.0315 C.MCIFAFION OF LNEARNFD 

PRFMILM RFFl NDS: CREDIT 

INSl RANCF (REPEALED) 
.0316 MISSI AFEMEN T OF ACE: 

CREDI I (REPEALED) 



Statutory Aulhoritv G.S. 
5S-344;'5S-346: 58-35/ . 



57- J; 57-4: 5S-9; 



.0322 RFGLLAR CARE AND ATTENDANCE 
OF A PinSICIAN 

As used in life, accident and health and disabil- 
ity policies, "regular care and attendance of a 
physician" shall not be construed to require in- 
sureds to see or be under the care of a physician 
on a regular basis if it can be shown that the in- 
sured has reached his maximum point of recov- 
ery yet is still disabled under the terms of the 
insurance contract. This requirement shall not, 
ho\ve\er, restrict the riglit of the company to pe- 
riodicall\' examine or cause to have examined the 
insured accordmg to the terms of the contract of 
insurance. 

Statulon> Authority G.S. 57-/; 58-9; 58-249. 

.0323 COMPLICATION OF PREGNANCY 

Complications of pregnancy may not be treated 
differently from any other illness or sickness un- 
der the contract. 

Statutory Aut/writy G.S. 58-9; 58-249. 

.0324 ACQLIRED IMMl NE DEFICIENCY 
SYNDROME (AIDS) AND 
AIDS RELAI ED COMPLEX (ARC) 
AIDS and ARC must be treated as any other 
dread disease under pohcy provisions and appli- 
cations. ARC must be defined within the form. 

Statutory Authority G.S. 58-9; 58-249; 58-254.7. 

SECTION .0400 - LIFE: GENER.\L N.\TLRE 

.0401 LIFE: GENERAL NATLRE (REPEALED) 



Statutory Aut/writy G.S. 58-9. 

.0407 GROUP LIFE INSURANCE: DEPENDENT 
BENEFIT 

Dependent life insurance may be written in 
connection with group life insurance in amounts 
Het » oxoo ' jO »f tl*<* following ochedulo: 

Dependent Spous e ^ i 10.000.00 

Dependent Children S 10,000.00 

as allowed by an insurer's under\vritine prac- 
tices. 

Statutory Authority G.S. 58-9; 58-210. 

.0417 REFUND OF UNEARNED PREMIUM 
AT DEATH: CREDII INSURANCE 
(REPEALED) 

.0418 SUICIDE: CREDIT (REPEALED) 

Statutory Aut/writy G.S. 58-9; 58-349; 58-351. 

.0420 APPRO\ AL OF CONTRACTS: 
ADDITION.VL INFORMATION 
REQUIRED 

A company submitting \ariable annuity con- 
tracts to the department for approval shall fur- 
nish the foUowmg information with each \ariabie 
annuity contract filing: 

( 1 ) a copy ef aH infonnution fiie4 >vith aft4 ap- 
pro' .e J by t4*e Secuntio ' , ' »«4 V xchung e 
Commi - JiMon. e\idence that a copv of all ap- 
propriate information has been reastered 
with the Secunties and f xchaniie Commis- 
sion, 

(2) a copy of all sales promotion material to 
be used in North Carolina, 

(3) a copy of the variable annuity application 
form, 

(4) a copy of the "SuitabUity Questionnaire" 
form, and 

(5) a copy of all proposed riders to be used with 
the variable annuity contract. 

Statutory Aut/writy G.S. 58-79.2. 

.0421 PREPAR.\TION OF VARIABLE 
ANNUITY CON IRACT FILINGS 

A company submitting variable annuity con- 
tracts to the department for approval must pre- 
pare such filings in the following manner: 

(1) Separate filings should be made for indi- 
vidual and group contracts, with all supple- 
mentar\" material grouped accordingly. 

(2) The filing letter should include a listing of 
all form numbers and a description of the 
contracts being tiled. 

(3) The filing letter should state whether or not 
the annuity mortality table developed from 
the company's experience is used, and it so. 



NORTH CAROLINA REGISTER 



536 



PROPOSED RULES 



a copy of such table should accompany the 

filing. 
f-H 44^ fUrn^ k44^ vhould ckMrly ^tote tferi- At? 

L'oiitria't ' . i husL - boon upprosud by tfei* Soou 

ntio ' . ' lixchangL ' Commihnion. 
( ^ 4 ) The filing letter should clearly indicate 

the states in which the subject contract has 

been tiled and approved. 

Statutory Auihority G.S. 5S-79.2. 

.0424 1 IFF. INSLRANCE .\D\ ERTISING: 
DFFINFriONS 

For the purpose of 1 1 NCAC 12 .0424 to .0433; 

(1) "PoUcy" shall include any policy, plan, 
certificate, contract, agreement, statement of 
coverage, rider, or endorsement which pro- 
\ides for life insurance or annuity benefits. 

(2) "Insurer" shall include any individual, cor- 
poration, association, partnership, reciprocal 
exchange, inter-insurer, Lloyd's, fraternal 
benefit society, and any other legal entity 
which is defmed as an "insurer" in the in- 
surance code of this state or issues life in- 
surance or annuities in this state and is 
engaged in the advertisement of a policy. 

(3) "Ad\crtiscment" shall be material designed 
to create public interest in life msurance or 
annuities or in an insurer, or to induce the 
public to purchase, increase, modify, rein- 
state, borrow on. surrender, replace or retain 
a policN mcludmg: 

(a) printed and published material, audiovis- 
ual material, and descripti\e literature of 
an insurer used in direct mail, newspapers, 
magazines, radio, and tele\'ision scripts, 
billboards, and similar displays: 

(b) descriptive literature and sales aids of all 
kinds issued by an insurer or agent, in- 
cluding but not limited to, circulars, leaf- 
lets, booklets, depictions, illustrations, and 
form letters; 

(c) material used for the recruitment, training, 
and education of an insurer's sales per- 
sonnel, agents. soUcitors, and brokers 
which is designed to be used or is used to 
induce the pubUc to purchase, increase, 
moditV. reinstate, borrou' on. surrender, 
replace or retain a policy; 

(d) prepared sales talks, presentations and 
material for use by sales personnel, agents, 
solicitors and brokers. 

(4) ".Advertisement" for the purpose of 11 
NCAC 12. 0405 to .0433 shall not mclude; 

(a) communications or materials used within 
an insurer's own organization and not in- 
tended for dissemination to the public; 



(b) communications with policyholder other 
than matenal urging polic\"holdcrs to 
purchase, increase, modify, reinstate, bor- 
row on. surrender, replace or retain a 
policy; 

(c) a general announcement from a group m- 
blanl;cjt pohcyholder to eligible indi\iduals 
on an employment or membership list 
that a policy or program has been written 
or arranged; provided the announcement 
clearly indicates that it is preliminary to 
the issuance of a booklet explaining the 
proposed coverage. 

(5) "Nonguaranteed Policy Flement" shall 
mean anv premium, cash \alue. death 
benefit, endowment \alue. dnidend or 
other policy benefit or pricing clement or 
portion thereof whose amount is not 
guaranteed by the terms of the contract. 

Statuton- Authority G.S. SS-9: 58-54.4: 58-199. 

.0427 LIFF INSl RANCF ADVERTISING: 
DISCFOSLRE REQUIREMENTS 

(a) The information required to be disclosed 
by 11 NCAC 12 .0424 to .0433 shaU not be 
minimized, rendered obscure or presented in an 
ambiguous fashion or intermingled with the text 
of the ad\ertisement so as to be confusing or 
misleading. 

(b) No advertisement shall omit material in- 
formation or use words or phrases in other than 
their customan' insurance meaning or use words, 
phrases, statements, references or illustrations if 
such omission or such use has the capacity, 
tendency, or effect of misleading or deceiving 
purchasers or prospecti\'e purchasers as to the 
nature or extent of any policy benefit payable, 
loss covered, premium payable or state or federal 
tax consequences. The fact that the policy of- 
fered is made a\ailable to a prospecti\e insured 
for mspection prior to consummation of the sale, 
or an offer is made to refund the premium if the 
purchaser is not satisfied, does not remedy mis- 
leading statements. 

(c) In the e\'ent an advertisement uses "Non- 
Medical", "No Medical Examination Required" 
or similar teims where issue is not guaranteed, 
such terms shall be accompanied by a further 
disclosure of equal prominence and in 
juxtaposition thereto to the effect that issuance 
of the policy may depend upon the answers to 
the heahh questions. 

(d) ,-Vn advertisement shall not use as the name 
or title of a life insurance policy an_\' phrase which 
does not include the words "life insurance" un- 
less accompanied by other language clearly indi- 
cating it IS life insurance. 



557 



SORTH CAROLISA REGISTER 



PROPOSED RULES 



(e) An acl\crtiscmcnt shall prominently de- 
scribe the type of policy advertised. 

(f) An advertisement of a policy marketed by 
the direct response techniques shall not state or 
imply that because there is no agent or commis- 
sion involved there will be cost saving to pro- 
specti\e purchasers unless such is the fact. 

(g) /Vn advertisement for a policy containing 
graded or modified benefits shall prominently 
display any limitation of benefits. If the pre- 
mium is le\ el and coverage decreases or increases 
with age or duration, such fact shaU be promi- 
nently disclosed. 

(h) An advertisement for a policy with non- 
le\el premiums shall prominently describe the 
premium changes. 

(i) Disidc ' iidi . Ndtiiiuaranteed Policy riements: 

(1) An advertisement shall not utilize or de- 
scribe dividends nonguarantecd policy el- 
ements in a manner which is misleading 
or has the capacity or the tendency to 
mislead. 

(2) Aji advertisement shall not state or imply 
that the payment or amount of di' . idonds 
nonguarantecd policy elements is guaran- 
teed. If dividundi i nonguarantecd policy 
elements are illustrated, they must be 
based on the insurer's current di' i idend 
scale and the illustration must contain a 
statement to the effect that they are not 
to be construed as guarantees or estimates 
of amounts dividondn to be paid in the 
future. 

(4^ A«- advoili '. t ' in e nt •. hall H++t- ( . tiite ef imply 
thrtt- illu; . trutud dis'idt ' iid ;. und e r » pcirtic 
iputing pcWicy «f pure ondo' . ' . mL ' nt w+H- b*» 
e* 6t*H- be i i ufficiont st- i*t+y future * time te 
ui .;. urt :' , without t4+t* further puymunt »f 
prL ' iniuini . , t+h* recfipt h4 bL ' nL ' fit ' i, i i uch a* 
tt piiid up policy, unle ' -i 'i t+M» ad' i 'L ' rtiiiL ' mont 
cl e arly afhi precii i cly ctplainn: 
(A4 Vrhrrt- b e nefitf t wf cov e rag e would be 

provided at- ' . . uch time, aH4 
itWi under ' ■ ' ■ hat condttioii! ! A+^ ' ■ ' ■ '(luld occur. 

(■V) An ad\ertisement that includes any illus- 
trations or statements containing or based 
up(^n nonguarantecd elements shall set 
fortli with equal prominence etjinparable 
illustrations or statements containing or 
based upon the guaranteed clement. 

(4) Jf an advertisement refers to any non- 



only if there is a change in the insurer's 
current or anticipated experience, the ad- 
vertisement may indicate any such limita- 
tion on the insurer s ndit. 



guaranteed policx clement, it shall indicate 
that the insurer reserves the nght to 
change any such element at any time and 
for any reason. However, if an insurer has 
agreed to limit this right in any way, such 
as, tor example, if U has agreed to change 
these elements only at certain intervals or 



(5) An advertisement shall not refer to divi- 



(2) 



dends as "free"use words of similar im- 
port, unless the tax treatment of dividends 
is fully explained and the nature of the 
dividend as a reluni of premium is indi- 
cated clearly. 
(j) An advertisement shall not state that a pur- 
chaser of a policy will share in or receive a stated 
percentage or portion of the earnings on the 
general account assets of the company, 
(k) Testimonials or IZndorsements by Third 
Parties: 

(1) Testimonials used in advertisements must 
be genuine; represent the current opinion 
of the author; be applicable to the policy 
advertised, if any; and be accurately re- 
produced. In using a testimonial, the 
insurer makes as its own aU of the state- 
ments contained therein, and such state- 
ments are subject to all provisions of ! 1 
NCAC 12 .0424 to .0433. 
If the individual making a testimonial or 
an endorsement has a financial interest in 
the insurer or a related entity as a stock- 
holder, director, officer, employee or oth- 
erwise, or receives any benefit directly or 
indirectly other than required union scale 
wages, such fact shall be disclosed in the 
advertisement. 

An advertisement shall not state or imply 
that an insurer or a policy has been ap- 
proved or endorsed by a group of indi- 
viduals, society, association or other 
organization unless such is the fact and 
unless any proprietary relationship be- 
tween an organization and the insurer is 
disclosed. If the entity making the 
endorsement or testimonial is owned, 
controlled or managed by the insurer, or 
receives any payment or other consider- 
ation from the insurer for making such 
endorsement or testimonial, such fact 
shall be disclosed in the ad\crtisement. 
An advertisement shall not contam statis- 
tical information relating to any insurer or policy 
unless it accurately rellects recent and relevant 
facts. The source of any such statistics used in 
an advertisement sh;ill be identified therein. 

(m) Introductory, Initial or Special Offers and 
Enrollment Periods: 

(1) An advertisement of an individual poUcy 
or combination of such policies shall not 
state or imply that such policy or combi- 
nation of such policies is an introductory, 



(3) 



(1) 



NORTH CAROLINA REGISTER 



5iS 



PROPOSED RULES 



initial or special offer, or that applicants 
\sill receive substantial advantages not 
available at a later date, or that the offer 
is available only to a specified group of 
individuals, unless such is the fact. An 
adsertisement shall not describe an en- 
rollment period as "special" or "limited" 
or use similar words or phrases in de- 
scribing it when the insurer uses successive 
enrollment periods as its usual method of 
marketing of its policies. 

(2) .\n ad\'ertisement shall not state or imply 
that only a specific number of policies will 
be sold, or that a time is fixed for the dis- 
continuance of the sale of the particular 
policy advertised because of special ad- 
\'antagcs available in the policy. 

(3) An advertisement shall not offer a policy 
wiiuh utilizes a reduced initial premium 
rale in a manner which overemphasizes 
the a\ailability and the amount of the re- 
duced initial premium. \\Tien an insurer 
charges an initial premium that differs in 
amount from the amount of the renewal 
premium payable on the same mode, all 
references to the reduced initial premium 
shall be followed by an asterisk or other 
appropriate symbol which refers the 
reader to that specific portion of the ad- 
\ertisement which contains the full rate 
schedule for the policy being advertised. 

(4) An enrollment period duriing which a 
particular insurance policy may be pur- 
chased on an individual basis shall not be 
oftered within this state unless there has 
been a lapse of not less than three months 
between the close of the immediately pre- 
ceding enrollment period for the same 
policy and the opening of the new enroll- 
ment period with the number of enroll- 
ment penods being limited to no more 
than two in any one calendar year for a 
particular insurance product. The adver- 
tisement shall specify the date by which 
the applicant must mail the application, 
which shall not be later than 10 days and 
not more than 40 days on which such en- 
rollment period is advertised for the first 
time. This shall apply to all advertising 
media--i.e., mail, newspapers, radio, tele- 
\ision, magazines and periodicals-by any 
one insurer. The phrase "any one 
insurer" includes all the aJTiliated compa- 
nies of a group of insurance companies 
under common management or control. 
Ihis does not apply to the use of a ter- 
mination of cutoff date beyond which an 
indi\idual application for a guaranteed is- 



sue pobcy will not be accepted by an 
insurer in those instances where the ap- 
plication has been sent to the applicant in 
response to his request. It is also inap- 
plicable to solicitations of employees or 
members of a particular group or associ- 
ation which other\\'ise would be ehgible 
under specific provisions of the insurance 
code for group, blunlcot (*f franchinu in- 
surance. In cases where an insurance 
product is marketed on a direct mail basis 
to prospective insureds by reason of some 
common relationship with a sponsoring 
organization, this shall be applied sepa- 
rately to each such sponsoring organiza- 
tion, 
(n) An advertisement of a particular policy 
shall not state or imply that prospective insureds 
shall be or become members of a special class, 
group or quasi-group and as such enjoy special 
rates, dividends or underwriting pri\ileges unless 
such is the fact. 

(o) An advertisement shall not make unfair or 
incomplete comparisons of policies, benefits, 
dividends or rates of other insurers. An ad\er- 
tisement shall not falsely or unfairly describe 
other insurers, their policies, services or methods 
of marketing. 

Statuwiy Authorily G.S. 5S-9; 5S-54.4; 5S-I99. 

.0428 LIFE INSLR.VNCE .\D\ KRTISING: 
IDENTITY OF INSl RER 

(a) The name of the insurer shall be clearly 
identified in all advertisements, and if any specific 
individual policy is advertised it shall be identified 
either by form number or other appropriate de- 
scription. If an application is a part of the ad- 
vertisement, the name of the insurer shall be 
shown on the application. An advertisement 
shall not use a trade name, an insurance group 
designation, name of the parent company of the 
insurer, name of a particular division of the 
insurer, ser\'ice mark, slogan, symbol or other 
device or reference without disclosing the name 
of the insurer, if the advertisement would have 
the capacity or tendency to mislead or deceive 
as to the true identity of the insurer or create the 
impression that a company other than the 
insurer would ha\e any responsibihty for the fi- 
nancial obligation under a policy. 

(bj No advertisement shall use any combina- 
tion of words, symbols or physical materials 
which by their content, phraseology, shape, color 
or other characteristics are so similar to a com- 
bination of words, symbols or physical materials 
used by a governmental program or agency or 
otherwise appear to be of such nature that they 



539 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



tend to mislead prospective insureds into believ- 
ing that the solicitation is in some manner con- 
nected with such governmental program or 
agency. 

Stalutory- Authority G.S. 58-54.4: 58- J 99. 

.0429 I IKK INSURANCE AO\ KRTISING: 
LICENSING: SI ATI S OK INSl RER 

(a) An ad\ertisement which is intended to be 
seen or heard beyond the limits of the jurisdiction 
in which the insurer is licensed shall not imply 
licensing be>ond such lunits. 

(b) An advertisement may state that an insurer 
is licensed in the state where the advertisement 
appears, pro\ided it does not exaggerate such fact 
or suggest or imply that competing insurers may 
not be so licensed. 

(c) y\n advertisement shall not create the im- 
pression that the insurer, its financial condition 
or status, the payment of its claims, or the merits, 
desirability, or ad\isability of its policy forms or 
kinds of plans of insurance are recommended or 
endorsed by any governmental entity. However, 
where a governmental entity has recommended 
or endorsed a policy form or plan, iiuch aet- may- 
t*e r i tate ' d if tl*t» entity nuthori/eu its rocommon 
datum Of L ' ndor '. emont to- l*e U '. cd h* an udver 
ti 'i LMiiunt- such recommendatuMi or endorsement 
ma\ be stated if the entity authorizes such use. 

Statutory- Authority G.S. 58-54.4; 58-199. 

.04.M MKE INSl RANCE ADVKRTISING: 
ENKORCEMENl PROCEDl RES 

(a) Fach insurer shall maintain at its home or 
principal office a complete fde containing a 
specimen copy of ever>' printed, published or 
prepared ad\ertiscment of its blunkot, frunohioo 
i*H4 group policies, hereafter disseminated in this 
state, with a notation indicating the manner and 
extent of distribution and the form number of 
any policy advertised. Such fde shall be subject 
to inspection by this department. /Vll such ad- 
\ertisements .shall be maintained in said file for a 
period of either four years or until the filing of the 
next regular report on examination of the insurer, 
whichever is the longer period of time. 

(b) Each insurer subject to the provisions of 
11 NCAC 12 .0424 to .0433 shall file with this 
department with its annual statement a certificate 
of compliance executed by an authorized officer 
of the insurer wherein it is stated that to the best 
of his knowledge, information and belief the ad- 
vertisements which were disseminated by or on 
behalf of the insurer in this state during the pre- 
ceding statement yeiir, or during the portion of 
such year when 1 1 NCAC 12 .0424 to .0433 were 



in effect, complied or were made to comply in 
all respects with the provisions of 11 NCAC 12 
.0425 to .0433 and the insurance laws of this state 
as implemented and interpreted by 11 NCAC 12 
.0424 to .0433. 

Statutory Authority G.S. 58-9; 58-54.4; 58-199. 

.0436 INSURANCE POLICY REQUIREMENTS 

The commissioner shall not approve any vari- 
able life insurance form filed pursuant to this 
Regulation unless it confonns to the require- 
ments of this Section: 

(1) Filing of Variable Life Insurance Policies. 
All variable life insurance policies, and all 
riders, endorsements, applications and other 
documents which are to be attached to and 
made a part of the poHcy and which relate 
to the variable nature of the policy, shall be 
fded with the commissioner and approved 
by him in writmg prior to delivery or issu- 
ance for delivery in this state: 

(a) The procedures and requirements for such 
fifing and approval shall be, to the extent 
appropriate and not inconsistent with this 
Regulation, the same as those otherwise 
appficable to other life insurance poficies. 

(b) Lhe commissioner may approve variable 
life insurance policies and related forms 
with provisions the commissioner deems 
to be not less favorable to the 
policyholder and the beneficiary th.'m 
those required by tliis Regulation. 

(c) The requirements of (3)(e) of tliis Rule 
shall not apply to variable life insurance 
policies and related forms issued in con- 
nection with pension, profit-sharing and 
retirement plans if separate accounts for 
such policies are exempt pursuant to Sec- 
tion 3(c)(ll) of the Investment Company 
Act of 1940. 

(2) Mandatory Policy Benefit and Design Re- 
quirements. Variable life insurance policies 
delivered or issued for delivery in this state 
shall comply with the following minimum 
requirements: 

(a) The mortality and expense risk shall be 
borne by the insurer. 

(b) Gross premiums for death benefits shall 
be a level amount for the duration of the 
premium payment period, but this Sub- 
section shall not be construed to prohibit 
temporary' or permanent additional pre- 
miums for incidental insurance benefits 
or substandard risks. This Subsection 
shall not be deemed to prohibit the use 
of fixed benefit preliminary term insurance 
for a period not to exceed 120 days from 



NORTH CAROLINA REGISTER 



540 



PROPOSED RULES 



the date of the application for a vanable 
life insurance policy. I'he premium rate 
for such preliminap. term insurance shall 
be stated separately in the application or 
receipt. 

(c) A mmimum death benefit shall be pro- 
vided in an amount at least equal to the 
initial face amount of the policy so long 
as premiums arc duly paid [subject to the 
provisions of (4)(b) of this Rule). 

(d) The policy shall provide that the variable 
death benefit shall reflect the investment 
experience of the \ariable life insurance 
separate account established and main- 
tained by the insurer and that the excess, 
positive or negative, of the net investment 
return o\er the assumed investment rate, 
as applied to the benefit base of each var- 
iable life insurance policy, shall be used to 
pro\-ide: 

(i) fully paid-up variable life insurance pro- 
viding coverage for the same period as the 
basic insurance under the policy or fully 
paid-up term insurance amounts for a 
term of annual periods of not less than 
one year nor more than five years, positive 
or negati\'e, as the case may be, or a 
combination thereof: or 

(ii) \anable life insurance amounts, positi\e 
or negative, as the case may be, so that the 
reser\'e maintains the same percentage re- 
lationship to the variable death benefit as 
it would have on a corresponding fixed 
benefit policy: or 

(iii) any other form of insurance benefits as 
the commissioner may apprin'e. 

(e) Each variable life insurance policy shall 
be credited with the full amount of the net 
investment return applied to the benefit 
base. 

(f) Changes in \anable death benefits of each 
variable life insurance policy shall be de- 
termined at least annually. 

(g) The cash value of each variable life insur- 
ance policy shall be determined at least 
monthly. The method of computation 
of cash \alues and other non-forfeiture 
benefits, as described either in the policy 
or in a statement filed with the commis- 
sioner of the state in which the policy is 
deliwrcd, or issued for deli\ery, shall be 
in accordance with actuarial procedures 
that recognize the \ariable nature of the 
policy. The method of computation must 
be such that, if the net insestment return 
credited to the policy at all times from the 
date of issue should be equal to the as- 
sumed investment rate with premiums 



and benefits determined accordingly under 
the terms of the policy, then the resulting 
cash N'alues and other non-forfeiture ben- 
efits must be at least equal to the mini- 
mum values required by G.S. 58-201.2 of 
the insurance laws of this state (Standard 
Non-forfeiture Law) for a fixed benefit 
policy with such premiums and benefits. 
The assumed in\estment rate shall not 
exceed the maximum interest rate permit- 
ted under the Standard Non-forfeiture 
Law of this state. The method of com- 
putation may disregard incidental mini- 
mum guarantees as to the dollar amounts 
pa\able. Incidental minimum guarantees 
include, for example, but are not to be 
limited to, a guarantee that the amount 
payable at death or maturity shall be at 
least equal to the amount that otherwise 
would have been payable if the net in- 
vestment return credited to the policy at 
all times from the date of issue had been 
equal to the assumed investment rate, 
(h) The computation of \'alues required for 
each variable life insurance policy may be 
based upon such reasonable and necessarv' 
approximations as are acceptable to the 
commissioner, 
(i) In detennining the net in\'cstmcnt return 
to be applied to the benefit base the 
insurer may deduct only the charges de- 
scribed in .0438(7)(a)(i). (ii), (iv), and (v) 
of this Section. 
(3) Mandatory Policy Provisions. Fvery vari- 
able life insurance policy filed for approval 
in this state sh;dl contain at least the fol- 
lowing: 
(a) The cover page or pages corresponding to 
the cover page of each such policy shaU 
contain: 
(i) a prominent statement in cither con- 
trasting color or in boldface type at least 
four points larger than the type sbce of the 
largest type used in the text of any pro- 
vision of that page, that the death benefit 
may be variable for fixed under specified 
conditions; 
(ii) a prominent statement in either con- 
trasting color or in boldface type at least 
four points larger than the type size of the 
largest type size used in the text of any 
provision on that page th;it cash values 
may increase or decrease in accordance 
with the experience of the separate ac- 
count subject to any specified minimum 
guarantees; 
(nil a statement that the minimum death 
benefit will be at least equal to the initial 



541 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



face amount at the date of issue if premi- 
ums are duly paid and if there are no 
outstanding policy loans, partial with- 
drawals, or partial surrenders; 

(iv) the rule, or a reference to the policy 
provision which describes the method for 
determining the variable amount of insur- 
ance payable at death; 

(v) a captioned pro\ision which provides 
that the policyholder may return the vari- 
able lile insurance policy within 45 days 
of the date of the execution of the appli- 
cation or within 10 days of receipt of the 
policy by the policyholder, whichever is 
later, and receive a refund of all premium 
payments for such policy; and 

(vi) such other items as are currently re- 
quired for fixed benefit life insurance pol- 
icies and which are not inconsistent with 
this Regulation; 

(vii) for all variable lite insurance policies, 
w Inch do not pro\ idc, while in force, a 
death benefit at least equal to the amount 
specified u1 issue or at the most recent 
policy change requested by the 
policyholder, must contain an endorse- 



(b) 



(c) 



ment or sticker, pnntcd in contrasting 
t\pe or color which contains sufficient 
cautionarN lanL!uagcs such as: "11 US 
POI IC^' DOl S NO I ll.Wi: A MINI- 



MI^ GTAj^iJsnTbD i2M^ 

11-11. fill Di All! Bi:M:in in 



HIS roi k:v \\\\ bh i i;ss than 



OR 



MAY 



I x(:i;i;i) 



IHI- 



PRO.II ( n D BFNl 1 lis RFPRFS- 



1 Nil D BY 
AGI Nf." 



iiii: 



SOI ICniNG 



A pro\ision for a grace period of not less 
than 31 days from the premium due date 
which shall provide that where the pre- 
mium is paid within the grace period, 
pohcy values will be the same, except for 
the deduction of any overdue premium, 
as if the premium were paid on or before 
the due date; 

A provision that the policy will be rein- 
stated at any time within two years from 
the date of default upon the written ap- 
plication of the insured and evidence of 
insurability, including good health, satis- 
factory to the insurer, unless the cash sur- 
render value has been paid or the period 
of extended insurance has expired, upon 
the payment of any outstanding indebt- 
edness arising subsequent to the end of 
the grace period following the date of de- 
fault together with accrued interest 
thereon to the date of reinstatement and 



payment of an amount not exceeding the 
greater of: 

(i) all overdue premiums with interest at a 
rate not exceeding eight percent per an- 
num compounded annually and any 
indebtedness in effect at the end of the 
grace period following the date of default 
with interest at a rate not exceeding eight 
percent per annum compounded annu- 
ally; or 

(ii) 110 percent of the increase in cash sur- 
render value resulting from reinstatement 
plus all overdue premiums for incidental 
insurance benefits with interest at a rate 
not exceeding eiglit percent per annum 
compounded annually; 

(d) A full description of the benefit base and 
of the method of calculation and applica- 
tion of any factors used to adjust variable 
benefits under the policy; 

(e) A provision designating the separate ac- 
count to be used and stating that: 

(i) Such separate account shall be used to 
fund only variable hfe insurance benefits, 
except to the extent permitted by 
(5)(c)(vi)ofthis Rule; 

(ii) The assets of such separate account 
shall be available to cover the liabilities 
of the general account of the insurer only 
to the extent that the assets of the separate 
account exceed the liabilities of the sepa- 
rate account arising under the variable life 
insurance policies supported by the sepa- 
rate account; and 

(iii) The assets of such separate account 
shall be valued at least as often as any 
policy benefits vary but at least monthly; 

(f) A provision that at ;iny time during the 
first 18 months of the variable life insur- 
ance policy, so long as premiums are duly 
paid, the owner may exchange the policy 
for a policy of permanent fixed benefit life 
insurance on the life of the insured for the 
same Initial amount of insurance as the 
variable Ufe insurance policy, and on a 
plan of insurance specified in the policy, 
pro\'idcd that the new policy: 

(i) shall bear the same date of issue and age 
at issue as the original variable life msur- 
ance pohcy; 

(ii) issued on a substantially comparable 
plan of permanent insurance offered in 
this state by the insurer or an affiliate on 
the date of issue of the variable life insur- 
ance pohcy and at the preiTuum rates in 
effect on that date for the same class of 
insurance; 



NORTH CAROLINA REGISTER 



542 



PROPOSED RULES 



(ill) includes such riders and incidental in- 
surance benefits as were included in the 
original policy if such riders and incidental 
insurance benefits are issued with fixed 
benefit policy; 
(iv) shall be issued subject to an equitable 
premium or cash value adjustment that 
takes appropriate account of the premi- 
ums and cash values under the original 
and new policies; A detailed statement 
of the method of computing such adjust- 
ment shall be filed with the commissioner; 
(v) shall not require evidence of insurability 
for this exchange; 

(g) A provision that the policy and any papers 
attached hereto by the insurer, including 
the application if attached, constitute the 
entire insurance contract; 

(h) A designation of the officers of the insurer 
who are empowered to make an agree- 
ment or representation on behalf of the 
insurer and an indication that statements 
by the insured, or on his behalf, shall be 
considered as representation and not war- 
ranties; 

(i) /Vn identification of the owner of the in- 
surance contract; 

(j) A provision setting forth conditions or re- 
quirements as to the designation, or 
change of designation, of a beneficiary and 
a provision for disbursement of benefits in 
the absence of a beneficiary designation; 

(k) A statement of any conditions or require- 
ments concerning the assignment of the 
policy; 

(1) A description of any adjustment in policy 
values to be made in the event of mis- 
statement of age or sex of the insured; 

(m) A provision that the policy shall be 
incontestable by the insurer after it has 
been in force for two \ears during the Life 
time of the insured; 

(n) A provision stating that the investment 
policy of the separate account shall not 
be changed without the approval of the 
insurance commissioner of the state of 
domicile of the insurer, and that the ap- 
proval process is on fde with the com- 
missioner of this state; 

(o) A provision that pa\mcnt of variable 
death benefits in excess of the minimum 
death benefits, cash values, policy loans, 
or partial withdrawals (except when used 
to pay premiums) or partial surrenders 
may be deferred: 
(i) for up to six months from the date of 
request, if such payments are based on 
pohcy values winch do not depend on the 



in\estment performance of the separate 
account; or 
(ii) otherwise, for any period during which 
the New "V'ork Stock Exchange is closed 
for trading (except for normal hoUday 
closing) or when the Securities and Ex- 
change Commission has determined that 
a state of emergency exists which may 
make such payment impractical; 
(p) A description of the basis for computing 
the cash surrender \'alue under the policy 
shall be included; Such surrender value 
may be expressed as neither 
(i) a schedule of cash value amounts per 
one thousand dollars ($1,000) of variable 
face amount at each attained age or policy 
year for at least 20 )"ears from issue, or for 
the premium pa\ing period, if less than 
20 years; or 
(ii) one cash \'alue schedule as described in 
(3)(p)(i) of this Rule for the death benefit, 
or for each one thousand dollars ($1,000) 
of death benefit, which would be in effect 
if the net investment return is always 
equal to the assumed investment rate and 
a second schedule applicable to any ad- 
justments to the death benefit (disregard- 
ing the minimum death benefit guarantee 
and term insurance amounts) if the net 
investment return does not equal the as- 
sumed investment rate at each age for at 
least 20 years from issue, or for the pre- 
mium paying period if it is less than 20 
years; 
(q) Premiums for incidental insurance benefits 

shaU be stated separately; 
(r) Any other policy provisions required by 

this Regulation; 
(s) Such other items as are currentl\- required 
for fixed benefit life msurance policies and 
are not inconsistent with this Regulation. 
(4) Non-forfeiture, Partial Withdrawal, Policy 
Loan and Partial Surrender Provisions. 
Every variable life insurance policy delivered 
or issued for deli\'ery in this state shall con- 
tain provisions which are not less favorable 
to the policyholders than the following: 
(a) a provision for non-forfeiture insurance 
benefits so that at least one such benefit 
is offered on a fixed basis from the due 
date of the premium in default: 
(i) Variable extended term insurance may 

not be offered; 
(ii) A given non-forfeiture option need not 
be offered on both a fixed and a \ariable 
basis; 
(iii) The insurer may establish a reasonable 
minimum cash surrender value below 



54i 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



which any such non-forfciturc insurance 
options will not be available; 
(b) a provision for policy loans (which may 
at the option of the insurer be entitled and 
referred to as a partial withdrawal pro- 
vision) not less favorable to the 
policyholder than the following: 

(i) Up to 75 percent but if the loan is made 
from the general account not more than 
90 percent of the policy's cash value may 
be borrowed; 

(ii) The amount borrowed, or any repay- 
ment thereof, shaU not affect the amount 
of the premium payable under the policy; 

(iii) The amount borrowed shall bear in- 
terest at a rate not to exceed eight percent 
per year compounded annually; 

(iv) Any indebtedness shall be deducted 
from the proceeds p:i\ ibje on death; 

(v) /Vny indebtedness shall be deducted 
from the cash vain up. in surrender or in 
determining any non-torfciture benefit; 

(vi) NVlienevcr the indebtedness exceeds the 
cash value, the insurer shall give notice of 
intent to cancel the policy if the excess 
indebtedness is not rep;ud within 31 days 
after the date of mailing of such notice; 

(\ii) The policy may provide that if, at any 
time, so long as premiums arc duly paid, 
the variable death benefit is less than it 
would ha\e been if no loan or withdrawal 
had ever been made, the policy holder 
may increase such \ariable death benefit 
up to what it would ha\e been if there had 
been no loan or withdrawal by paying an 
amount not exceeding 110 percent of the 
corresponding increase in cash value and 
by furnishing such evidence of insurability 
as the insurer may request; 

(viii) The policy may specify a reasonable 
minimum amount which may be bor- 
rowed at any time but such minimum 
shall not apply to any automatic premium 
loan provision; 

(ix) No policy loan provision is required if 
the pohcy is under the extended insurance 
non-forfeiture option; 

(x) In addition to the foregoing, the policy 
may contain partial surrender provision; 
howcNcr, any such provision shall pro\ide 
that the policyholder may request part of 
the cash \alue and both the variable and 
minimum death benefits will be reduced 
in proportion to the percentage of the 
cash value recei\ed by the policyholder 
and the premium for the remaining 
amount of insurance will also be reduced 
to the appropriate rates for the reduced 



amount of insurance. The policy may 
provide that a partial surrender provision 
shall not require the insurer to reduce the 
amount of the minimum death benefit to 
less than the lowest amount of minimum 
death benefit which would have been is- 
sued to the insured under the insurance 
plans of the insurer at the time the policy 
was issued. The policy must clearly pro- 
vide that the policyholder has the option 
of electing to exercise the cash value priv- 
ileges of the policy loan or partial with- 
drawal provision rather than the partial 
surrender pro\ision; 
(xi) All poliis 1" "1, partial withdrawal, or 
partial surrender provisions shall be con- 
structed so that variable life insurance 
pohcyholders who have not exercised such 
provision arr not disad\antaged by the 
exercise thereof; 
(xii) Monies paid t" the policyholders upon 
the exercise ot any policy loan, partial 
withdrawal, or partial surrender provision 
shall be withdrawn from the separate ac- 
count and shall be returned to the separate 
account upon repayment except that a 
stock insurer may pro\ide the monies for 
pohcy loans from the general account. 
(5) Other Policy Provisions. The foUowrng 
pro\'isions may in substance be included in 
a \ariable hfe insurance policy or related 
form dehvered or issued for deliver>' in tlris 
state: 

(a) An exclusion for suicide within two years 
of the pohcy issue date; 

(b) Incidental msurance benefits may be of- 
fered on a fixed basis only; 

(c) Pohcies issued on a participating basis 
shall offer to pay dividend amounts in 
cash. In addition, such pohcies may offer 
the following di\idend options. 

(i) The amount of the dividend may be 
credited against premium payments; 

(ii) The amount of the dividend may be 
applied to pro\ide paid-up amounts of 
additional fixed benefit whole Hfe insur- 
ance; 

(iii) The amount of the dividend may be 
apphed to provide paid-up amounts of 
additional variable life insurance; 

(iv) The amount of the dividend may be 
deposited in the general account at a 
specified minimum rate of interest; 

(v) The amount of the dividend may be 
apphed to pro\'ide paid-up amounts of 
fixed benefit one-year tenn insurance; 

(vi) The amount of the dividend may be 
deposited as a variable deposit in the sep- 



NORTH CAROLINA REGISTER 



544 



PROPOSED RULES 



aratc account if the separate account is 
exempt pursuant to Section 3(c)(ll) of 
the hi\cstment Company Act of 1940; 
(d) A proN'ision allowing the policyholder to 
elect in wnting in the application for the 
policy or thereafter an automatic premium 
loan on a basis not less favorable than 
that required of policy loans or partial 
withdrawals under (4) of this Rule except 
that a restriction that no more than two 
consecuti\e premiums can be paid under 
this pro\ision may be imposed. 

Siamon- Auihoriiy G.S. 5S-9(/j: 5S-'^9.2. 

.0441 KFl'ORIS TO POLICMIOLDERS 

Any insurer delivering or issuing for delivery in 
tins state any \ariable life insurance policies shall 
mail to each \anable hfe insurance policyholder 
at his or her last known address the following 
reports: 

( 1 ) w itliin 30 days after each anniversan" of the 
policy, a statement or statements of the cash 
surrender \alue, death benetit, any partial 
withdrawal or policy loan, any interest 
charge, and any optional payments allowed 
pursuant to .0436(4) of this Section under 
the policy computed as of the policy anni- 
versar\ date; pro\ided, houe\er. that such 
statement may be furnished within 30 da>s 
after a specitied date in each policy year so 
long as the information contained therein is 
computed as of a date not more than 45 
days prior to the mailing of such notice; This 
statement shall state in contrasting color or 
distinctive type that, in accordance with the 
in\estment experience of the separate ac- 
count, the cash \alues and the variable death 
benefit may increase or decrease, and shall 
prominently identify any value described 
therein which may be recomputed prior to 
the next statement required b\ this Rule. 
If the poUcy guarantees that the variable 
death benefit on the next policy anniversary 
date will not be less than the \ariable death 
benefit specified in such statement, the 
statement shall be modified to so indicate; 

(2) annualh . if not already required by the Se- 
curities and Exchange Commission, a state- 
ment or statements including: 

(a) a summars' of the fmancial statement of 
the separate account based on the annual 
statement last filed with the commis- 
sioner; 

(b) the net in\estment return of the separate 
account for the last year and. for each year 
after the first, a comparison of the invest- 
ment rate of the separate account during 



the last year with the in\estment rate 
during prior years, up to a total of five 
years where available; 

(c) a list of in\estments held by the separate 
account as of a date not earlier than the 
end of the last year for which an annual 
statement was filed with the commis- 
sioner; 

(d) any charges, taxes, and brokerage fees de- 
termined on an accrual basis payable by 
the separate account during the previous 
year, each expressed as a dollar amount 
and a percentage and the total expressed 
as a dollar amount and as a percentage of 
the assets of the separate account; 

(e) a statement of the portfolio turnover rate 
as defmed herein during the preceding fis- 
cal year of investments allocated to the 
separate account: 

(i) The rate shall be calculated by dividing 
"A," the lesser of purchases or sales of 
portfolio securities for the particular fiscal 
year, by "B," the monthly average of the 
value of the portfolio securities owned by 
the separate account during the particular 
fiscal year. Such monthly a\erage shall 
be calculated by totaling the \-alues of the 
portfolio secunties as of the beginning and 
end of the first month of the particular 
fiscal year and as the end of each of the 
succeeding 1 1 months, and di\ idmg the 
sum by 13, except that the a\'erage value 
of securities for which market quotations 
are not available may be based upon the 
value of such securities as of the end of 
the preceding fiscal quarters. 

(ii) For the purposes of this Rule, there 
shall be excluded from both the numera- 
tor and the denominator all VS. Gov- 
ernment securities (short-term and 
long-term) and all other securities whose 
maturities at the time of acquisition were 
one year or less. Purchases shall also in- 
clude any cash paid upon the conversion 
of one portfolio security' into another. 
Purchases shall also include the cost of 
rights or warrants purchased. Sales shall 
include the net proceeds of the sale of 
rights or warrants. Sales shall also include 
the net proceeds of redemptions of port- 
folio securities by call or maturity. 

(iii) The insurer shall show, in addition to 
the calculated portfolio tumo\er rate, 
both the amount of the purchases and the 
amount of the sales [calculated as pre- 
scribed in (2)(e)(ii) of this Rule] and the 
monthly average (but not the individual 
monthly figures) of the \alue of the port- 



545 



IS'ORTH CAROLINA REGISTER 



PROPOSED RULES 



folio securities owned by the separate ac- 
count during the fiscal year, 
(iv) The insurer may, if it wishes, make any 
statement or explanation with respect to 
any significant \ariations in the portfolio 
turnover rate during the three fiscal years 
next preceding. 

(f) a statement of any change, since the last 
report, in the investment objective and 
orientation of the separate account, in any 
investment restriction or material quanti- 
tative or qualitative investment require- 
ment applicable to the separate account, 
or in the investment ad\iser or the sepa- 
rate account; 

(g) the name of each broker or dealer handling 
portfolio transactions on behalf of the 
separate account in which the insurer or 
an affiliate has any material direct or indi- 
rect interest and the nature of such trans- 
actions and the amount of compensation 
received by each such broker or dealer 
from business onginating with the sepa- 
rate account during the preceding fiscal 
year; 

(h) the names and principal occupations of 
each principal executive officer and each 
director of the insurer; and 
(i) the names of all parents of the insurer 
and the basis of control of the insurer, and 
the name of any person who is known to 
own, of record or beneficially, 10 percent 
or more of the outstanding voting securi- 
ties of the company 
(3) mc^nthlv, a report which describes the \alue 
of the insured s death benefits to 
polic\holders whose policies, while in force 
do not provide a death benefit at least equal 
to the amount specified at issue or at the 
most recent policy change requested by the 
policyholder. 

Staluloty Authority G.S. 5S-9(I); 58-79.2. 

.0444 SEPAR.\BI1.H \ ARTICLE (REPEALED) 

Statutory Authority G.S. 58-9(1); 58-79.2. 

.0446 SOLND HE AITII 

No policy of life insurance shall contain a pro- 
\ision that the policy will be \oided if the in- 
sured is not in sound good health on the effective 
date of the policy or date of reinstatement unless 
such provision contains the foUowmg: 
(1) The burden of proof as to whether the 
condition was material lies solely with the 
insurer; 



(2) If voided, there will be a full refund of pre- 
mium; 

(3) Reference to such condition was not con- 
tained in the written application. 

Statutory Authority G.S. 58-9; 58-/95. 

.0447 FREE LOOK PROMSION 

An insurer, prior to the time that any life in- 
surance or annuity poUcy is issued for delivery 
or delivered, shall ensure that a provision is dis- 
played by sticker or printed on the face of each 
life insurance or annuity policy, containing the 
following as appropriate: 

(1) if there is replacement of existing life insur- 
ance by an insurer not utilizing an agent in 
the sale or delivery of its policies, a "Tliirty 
Day Free Look" provision; 

(2) in all other cases, a "Ten Day Free Look". 

Statutory Authority G.S. 58-9; 58-195. 

.0451 POLICY LOAN INTEREST RATES 

(REPEALED) 
.0457 CREDIT INSURANCE: ALTOMOBILE 

LEASES (REPEALED) 

Statutory Authority G.S. 58-9; 58-9(1); 5S-79.2; 
58- /95. 

SECTION .0500 - ACCIDENT AND HEALTH: 
GENERAL NATURE 

.0502 RATE INCREASES FOR INDIVIDUAL 

AND BLANKEI POLICIES (REPEALED) 

Statutory Authority G.S. 58-251.2. 

.0504 APPROVAL OF FILING: 90 DAY 
DEEMER NOT IN EFFECT 

A request for additional information by the 
department within ^ 90 days after filing of an 
accident and health form, stays the deemer pro- 
vision in G.S. 58-254.7 until such time as the in- 
formation is received and acknowledged. 

Statutory Authority G.S. 58-254.7; 58-370(a). 

.0505 MAIL ORDER APPLICAIION: ACCIDENT 
AND HEALTH (REPEALED) 

Statutory Authority G.S. 58-257. 

.0514 COORDINATION: GROUP A/H 
CONTRACr BENEFIIS: GROUP 
COVERAGES 

Purpose. In order to promote consistency in 
liability for claims and claims determination for 
Group Accident and Health coverage, the de- 



NORTH CAROLINA REGLSTER 



546 



PROPOSED RULES 



partmcnt shall require a uruform order of benefits 
determination as follows: 

(1) Applicability: 

(a) This Coordination of Benefits ("COB") 
pro\'ision applies to this plan when a em- 
ployee or the employee s covered depend- 
ent has health care coverage under more 
than one plan. "Plan" and "This Plan" 
are defined in (2)(a) and (b) of this Rule. 

(b) If this COB provision applies, the order 
of benefit determination rules should be 
looked at first. Those rules determine 
whether the benefits of this plan are de- 
termined before or after those of another 
plan. The benetlls of this plan: 

(i) Shall not be reduced when, under the 
order of benefit determination rules, this 
plan determines its benefits before another 
plan; but 

(ii) may be reduced when, under the order 
of benefit dctcrrmnation rules, another 
plan determines its Section (IV) Effect on 
the Benefits of tliis plan. 

(2) Definitions: 

(a) A "Plan" is any of these which provides 
benefits or ser\'ices for, or because of. 
medical or dental care or treatment: 
(i) True group insurance, whether insured 
or self-insured. This includes prepay- 
ment, group practice or indi\idual practice 
coverage. It does not include school 
accident-t\pe coverage, blanket, franchise 
or indnidual coverage, individual, auto- 
mobile and homeowner co\erai;e. 



(iil Coverage under a governmental plan 
or required or prov'ided by law. This does 
not include a state plan under .Medicaid 
(Title XIX, Grants to States for Medical 
Assistance Programs, of the United States 
Social Security Act as amended from time 
to time). It also does not include any plan 
when, by law, its benefits are excess to 
those of any private insurance program 
or other non-governmental program. 
Each contract or other arrangement for 
coverage under (2)(a) (i) or (ii) is a sepa- 
rate plan. .Also, if an arrangement has 
two parts and COB rules apply only to 
one of the two. each of the parts is a sep- 
arate plan. 

(b) "This Plan" is the part of the group con- 
tact that provides benefits for health care 
expenses. 

(c) "Pnmar\' Plan" "Secondary Plan". The 
order of benefit determination rules state 
whether this plan is a Pnmary Plan or 
Secondarv Plan as to another plan cover- 
ing the person. WTien this plan is a Pri- 



mary Plan, its benefits are determined 
before those of the other plan and without 
considering the other plan's benefits. 
When there are more than two plans 
covering the person, this plan may be a 
Pnmary Plan as to one or more other 
plans, and may be a Secondary Plan as to 
a different plan or plans. 

(d) ".-Mlowable Expense" means a necessary, 
reasonable, and customary item of ex- 
pense for health care, when the item of 
expense is covered at least in part by one 
or more plans covering the person for 
whom the claim is made. When a plan 
provides benefits in the form of services, 
the reasonable cash value of each service 
rendered will be considered both an al- 
lowable expense and a benefit paid. Total 
benefits paid must be equal lOll percent 
o^ necessary medical expenses covered by 
both plans. 

(e) "Claim Determination Period" means a 
calendar year. However, it does not in- 
clude any part of a vear during which a 
person has no coverage under this plan, 
or any part of a year before the date this 
COB provision or a similar provision 
takes effect. 

(3) Order of Benefit Determination Rules 

(a) General. WTien there is a basis for a claim 
under this plan and another plan, this plan 
is a Secondary Plan which has its benefits 
detennined after those of the other plan, 
unless: 

(i) the other plan has rules coordinating its 
benefits with those of this plan; and 

(ii) both those rules and tliis plan's rules, in 
(.^)(b)(ii)(B) of this Rule, require that this 
plan's benefits be detennined before those 
of the other Plan, 

(b) Rules. This plan determines its order of 
benefits using the first of the following 
rules which applies: 

(i) Non-dependent Dependent. The bene- 
fits of the plan which covers the person 
as an employee, member or subscriber 
(that is, other than as a dependent) are 
detennined before those of the plan which 
covers the person as a dependent. 

(ii) Dependent Child Parents Not Sepa- 
rated or Divorced. Except as stated in 
(3)(b)(iii)(B) of this Rule, when this plan 
and another plan cover the saine child as 
a dependent of different persons, called 
"parents": 

(A) the benefits of the plan of the parent 
whose birthday falls earlier in a year are 
detennined before those of the plan of 



547 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



the parent whose birthday falls later in 
that year; but 
(B) if both parents have the same birth- 
days, benefits of the plan covered the 
parent longer are determined before 
those of the plan which covered the 
other parent for a shorter period of 
time. 
However, if the other plan does not have 
the rule described in Paragraph (3)(a)) in 
this Rule, but instead has a rule based 
upon the gender of the parent, and if, as 
a result, the plans do not agree on the or- 
der of benefits, the rule in the other plan 
will determine the order of benefits, 
(iii) Dependent Cliild Separated or Di- 
vorced Parents. If two or more plans 
cover a person as a dependent child of di- 
vorced or separated parents, benefits for 
the child are determined in this order: 

(A) first, the plan of the parent with 
custody of the child; 

(B) then, the plan of the spouse of the 
parent with custody of the child; and 

(C) fmally, the plan of the parent not 
having custody of the child. 

However, if the specific terms of a court 
decree state that one of the parents is re- 
sponsible for the health pay or provide the 
benefits of the plan of that parent has ac- 
tual knowledge of those terms, the bene- 
fits of that plan are determined first. In 
this Rule, (3)(b)(iii)(C) does not apply 
with respect to any claim determination 
period or plan year during which any 
benefits are actually paid or provided be- 
fore the entity has 
that actual knowledge. 

(iv) Active Inactive Employee. The bene- 
fits of a plan which covers a person as an 
employee who is neither laid off nor re- 
tired (or as that employee's dependent) are 
determined before those of a plan which 
co\crs that person as a laid off or retired 
employee (or as that employee's depend- 
ent). If the other plan does not have 
(3)(b)(iv), and if, as a result, the plans do 
not agree on the order of benefits, 
(3)(b)(iv) is ignored. 

(v) Longer/Shortcr Length of Coverage. If 
more of Paragraph (3) of this Rule deter- 
mines the order of benefits, the benefits 
of the plan which covered an employee, 
member or subscriber longer are deter- 
mined before those of the plan which 
covered that person for the shorter time. 



Statutory Authority G.S. 57-1; 57-4; 57B; 
58-9(1); 58-249. 

.0515 COLNTERSIGNATLRE BY AGENT 
(REPEALED) 

Statutory Authority G.S. 58-9(1); 58-44. 

.0543 POLICIES CONTAINING A PRE- 
EXISTING CONDITION EXCLUSION 

All individual or franchise insurance policy 
forms and group certificates containing an exclu- 
sion for pre-existing conditions, or other lan- 
guage substantially similar to that set forth in 
form 11 NCAC 12 .0201, shall display a sticker 
or printed notice on the face of the policy and 
the outline of coverage. Such sticker shaU be m 
red bold face type the size of which shall not be 
less than 14 point. The use of a rubber stamp 
wiU not satisfy this requirement. 

Statutory Authority G.S. 57-1; 57-4; 58-9; 
58-249. 

.0544 POLICIES RENEWABLE AT THE 
OPTION OF THE COMPANY 

AH individual or franchise insurance policy 
forms and group certificates that are renewable 
at the option of the company or other language 
substantially similar to that set forth in form ! 1 
NCAC 12 .0201 shall display a sticker or pnnted 
notice on the face of the policy and the outline 
of coverage. Such sticker or notice shall be in 
red bold face type the size of which shall not be 
less than 14 point. The use of a rubber stamp 
will not satisfy this requirement. 

Statutory Authoritv G.S. 57-1; 57-4; 58-9; 
58-249. 

.0547 WAITING PERIOD (REPEALED) 

Statutory Authority G.S. 57-1; 57-4; 58-9; 
58-249; 58-252. 

.0551 CANCER INSLRANCE-REQUIREMENTS 

Cancer poUcy requirements. Cancer policies 
approved in this state must comply with the fol- 
lowing items: 
(1) The policy must have a pre-existing condi- 
tions sticker that complies with 1 1 NCAC 
12 .0543 and reads as follows: 
NO RECOVERY FOR PRE-EXISTING 
DIAGNOSED CANCER - READ 
CAREEULLY 

No benefits will be provided during the first 
two years of the policy for cancer diagnosed 
prior to the 30th day following the effective 
date shown in the policy schedule. 



NORTH CAROLINA REGISTER 



548 



PROPOSED RULES 



(2) In the definition of cancer, clmical diagnosis 
of cancer must be accepted as e\idence that 
cancer exists in an insured when a patho- 
logical diagnosis cannot be made provided 
such medical evidence substantially docu- 
ments the diagnosis of cancer and the in- 
sured received defmitive treatment for 
cancer Wlienever the requisite pathological 
clinical diagnosis can only be made 
postmortem, liability should be assumed 
retroacli\cl\ beginning with the date of the 
temiinal admission to the hospital for no 
less thim 45 days prior to the date of death. 

(3) A cancer policy cannot have a waiting pe- 
riod any longer than 30 days from the effec- 
tive date. 

(4) Benefits must be pro\ided for unrelated 
cancers diagnosed after the effecti\'e date of 
the policy. 

(5) Under the benefits provisions of the policy, 
provided the contract offers these benefits, 
our minimum standards are as follov\s: 

(a) Benefits for blood and plasma, the benefits 
should cover actual charges incurred, in- 
cluding fees for administering the blood. 

(b) The word ''In-patient" should precede 
drugs and medicines if the policy is an in- 
hospital indemnity contract or does not 
provide out-patient benefits. 

(c) Ambulance benefits should include trans- 
portation from one medical facility to an- 
other. 

(6) Cancer coverage may include other diseases 
or conditions, however, it must be properly 
labeled - CANCER AND SPBCIFIED 
DISnASr(S). 

(7) Cancer and dread disease policies are de- 
fined as "Medical I xpense" policies in re- 
gard to loss ratio requirements as set lorth 
in the N.MCr guidelines. 

Statutoty Authority G.S. 5S-9: 58-249; 58-254.7. 

.0554 STOP-I.OSS COVKKAGE: 
RKQl IKKMKMS 

Stop-loss coverage benefits begin only after a 
mmimum of five thousand dollars ($5,000) cov- 
erage benefits per member arc paid or incurred. 
The stop-loss policy may not be sold to em- 
ployers with less than 50 employees. 

Statutory Authority G.S. 58-9; 58-249; 58-254.7. 

.0555 LONG IFK\1 CARF INSl RANGE - 

REQl IKEMENTS: LONG lERM CARE 
POI.KA REQl IREMENTS 

(a) Definitions: 



(1) Long-Term Care Insurance is defined as 
any contract of insurance offering institu- 
tional or noninstitutional support in order 
to resore deteriorating health and to 
maintain functional independence. Such 
ser\-ices for an acute or chronic physical 
mental impairment, or short term illness 
or injur)', include but are not limited to 
assistance with daily luing, medical or 
rehabilitative care, and home health care. 

(2) In regard to Skilled, Intermediate, Custo- 
dial, or Home Health Care, uhen the in- 
sured recei\es definitive treatment for 
these services regardless of the type of fa- 
cility or settmg the insured is confined in, 
benefits are payable for the ser\ice receive 
based on the benefits of the contract for 
that service. 

(3) Custodial or Domiciliary Home facilities 
win be considered the same for insurance 
purposes. 

(b) The following pro\isions are required: 

(1) Prior skilled nursing home confinement 
may not be required to satisfy eligibility 
for benefits in lower levels of care. 

(2) Pnor hospitalization may not be required 
to satisfy eligibilit\' for long-tenn care 
benefits. 

(3) Long-term care insurance policies must 
provide benefits for at least three levels of 
care and pro\'ide the same duration for 
each level of care for a minimum of 12 
months. 

(4) Coordination or nonduplication of bene- 
fits IS permitted between true group long- 
term care policies only. 

(5) The loss ratio is required to be at least 60 
percent for indi\idu;d policies and at least 
75 percent for group policies. 

(6) Unless the solvency of the insurer is at nsk 
all individual Long-Term Care policies 
must be suaranteed renewable. 



Statutory Authority G.S. 58-9; 
58-545. 



58-249; 58- 254.7; 



.0556 FIOME HEALTH CARE POLICY 
REQLIREMENr 

All Home Health Care Policies shall ha\e the 
notice printed in contrasting type or color on the 
face of the policy as follows: "This Is Not A 
I ong-Tenn Care Policy - This Policy Provides 
Home Hcaltii Care Benefits Only - Read Care- 
fulh" Home health care policies must comply 
with G.S. 58-252. 

Statutoiy Authority G.S. 58-9; 58-249; 58-254.7. 



549 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



.0557 ['OIICIKS CONTAINING A 

IKKMINAIION OR CANCFI.I.ATION 
r'KOMSION 

Any policy or certificate of insurance which may 
be terminated for reasons other than non- 
payment of premium or the insured's stated age 
must be affixed with a notice referring the insured 
to the renewal provision. Such notice must ap- 
pear in 14 point bold red print and read as fol- 
lows: Important Cancellation Information - 
Please Read The Provision Entitled, 
" ", Pound On Page "...". 

Statutory Authority G.S. 5S-9; 58-249. 

.055« I'RKMILM RFAISION 

At least 30 days notice for individual insurance 
policies and at least 60 days notice for payroll 
deductible and group insurance policies must be 
given the insured in writing prior to the effective 
date of any rate increase and any policy benefit 
rc\ision. 

Statutory Authority G.S. 5S-9: 5S-249: 5S-254.7. 

SKCl ION .0600 - REPLACEMENT 
REGLLATIONS 

.0604 EXEMPTIONS 

I'nless otherwise specifically included, this 
Regulation shall not apply to transactions in- 
\ol\ing: 

(1) Credit life insurance; G.S. 58-341 through 
359: 

(2) Group life insurance or group annuities; 
G.S. 5S- 195 through 213; 

(3) An application to the existing insurer that 
issued the existing life insurance and a con- 
tractual change or a conversion privilege is 
being exercised, where replacing and existing 
insurer arc same, or subsidiaries or affiliates 
under common ownership or control; 

(4) Proposed life insurance that is to replace life 
insurance under a binding or conditional re- 
ceipt issued by the same company; 

(5) Transactions where the replacing insurer 
and the existing insurer are the same, or are 
subsidiaries or affiliates under common 
ownersliip or control; provided, however, 
agents or brokers proposing replacement 
shall comply with the requirements of St»^ 
tteH^rrVr .0605(2) ; 

(6) Registered Contracts shall be exempt from 
the requirements of Scctiono 7.B.3. 
.0607(2)(b) and Trftr^ .0607(2)(c) requiring 
provision of Policy Summary or ledger 
statement information; however, premium 
or contract contribution amounts and iden- 
tification of the appropriate prospectus or 



offering circular shall be required in lieu 
thereof 
(7) Life insurance policies and annuities issued 
in connection with a pension, profit-sharing 
or other benefit plan qualifying for tax 
deductibility under the provisions of Sec. 
401 of the Internal Revenue Code; provided, 
however, that full and complete disclosure 
of all material facts shall be given to the ad- 
ministrator or policyowner, ii~ other than the 
insured, of any plan to be replaced. 

Statutory Authority G.S. 5S-9; 5S-42.I: 58-195; 
5S-I99. 

.0605 DLTIES OF AGENTS AND BROKERS 

(a) Each agent or broker who initiates the ap- 
plication shall submit to the insurer to wlrich an 
application for life insurance or amiuity is pre- 
sented, with or as part of each apphcation: 

(1) A statement signed by the applicant as to 
whether replacement of existing life Insur- 
ance or annuity is invohed In the trans- 
action; 

(2) A signed statement as to whether the agent 
or broker knows replacement is or may be 
involved In the transaction; and 

(3) The requrrements of 5A(1) .0605(a)(1) and 
(2) may be satisfied by suitable questions on 
the apphcation. 

(b) WTicre a replacement if involved, the agent 
or broker shall: 

(1) Present to the appHcant, not later than at 
the time of taking the application, a "No- 
tice Regarding Replacement" in the form 
as descnbed In Exhibit A, or other sub- 
stantiaOy similar form approved by the 
Commissioner. The Notice shall be 
signed by both the applicant and the agent 
or broker and a copy left with the apph- 
cant. The agent or broker shall obtain 
with or as part of each application a fist 
of all existing life Insurance and/or annuity 
to be replaced and properly identified by 
name of insurer, the insured and contract 
number. If a contract number has not 
been assigned by the existing insurer, al- 
ternative identification, such as an apph- 
cation or receipt number, shall be hsted. 

(2) leave with the apphcant the original or a 
copy of any written or printed marketing 
communications used for the presentation 
to that specific applicant, including but 
not hmited to ledger statements, bro- 
chures, sales proposals or any other ma- 
terials necessary for the buyer to make an 
informed purchase decision. 

(3) Submit to the replacing Insurer with the 



NORTH CAROLINA REGISTER 



550 



PROPOSED RULES 



applicaticni a copy of the Replacement 
Notice presided pursuant to Section 
^^MAr .()6n5(h)(l). 
(c) Fiach agent or broker who uses written or 
printed marketing communications in a conser- 
vation shall leave with the applicant the original 
or a copy of such materials used. 

Staiuton Auihoritv G.S. 5S-9; 58-42.1; 5S-J95; 
5S-I99. 

.0607 Dl riKS OF INSIRKRS THAT USE 
AGEMS OR [BROKERS 

Fach insurer that uses an agent or broker in a 
life insurance or armuity sale shall: 

(1) Require with or as part of each completed 
application for life insurance or annuity, a 
statement signed by the agent or broker as 
to whether he or she knows replacement is 
or may be involved in the transaction. 

(2) Where a replacement is involved: 

(a) Require from the agent or broker with the 
application for hfe insurance or annuity: 

(i) a List of all of the applicant's existing life 
insurance or annuity to be replaced; and 

(ii) a copy of the Replacement Notice pro- 
vided the applicant pursuant to Section 
5.B.I. .()605(h)(r). Such existing life m- 
surance or annuity shall be identified by 
name of insurer, insured and contract 
number. If a number has not been as- 
signed by the existing insurer, alternative 
identification, such as an application or 
receipt number, shall be listed. 

(b) Send to each existing insurer a written 
communication ad\ising of the replace- 
ment or proposed replacement and the 
identification information obtained pur- 
suant to Section 7.R.I. ,0607(2)(a) and a 
Policy Summary, Contract Summary or 
ledger statement containing Policy Data 
»» t+H* prupo ' jL'd life inrairanou as required 
by N.C.G.S. 58-213.6-213.12 and for an 
annuity a contract summar\' as required 
in S e ction T^irr^ .0607(2)("c). Cost in- 
dices and equivalent level annual di\idend 
figures need not be included in the Policy 
Summan,' or ledger statement. The 
aforementioned Polic\' Summary, Con- 
tract Summary or ledger statement shall 
be based upon the l.XAC I face amount. 



plan, premium and siipplement.il riders 
or agreements, ij^ an\ . contained m the 
applicant s application to the replacing 
insurer. In the e\ent that multiple appli- 
cations are made bv or for an applicant. 
PolicN' Summar\ . (\>ntract Summary' or 
ledger statement shall be pro\'ided for 



each. /\J1 required items shall be sent 
within five working days of the date the 
application is received in the replacing 
insurer's home or regional office, or the 
date the proposed policy or contract is is- 
sued, whichever is sooner, 
(c) Where armuities are involved, the Contract 
Summary must be a separate document. 
All information required to be disclosed 
must be set out in such a manner as not 
to minimize or render any portion thereof 
obscure. "Contract Summary" means a 
written statement descnbing the elements 
of the annuity contract and deposit fund, 
including but not limited to where appli- 
cable, the following items: 

(i) One of the options under the contract 
available for annuity payout. 

(ii) A prominent statement that the contract 
does not provide cash surrender values if 
such is the case. 

(iii) The following amounts, where appli- 
cable, for the first ten contract years and 
representative contract years thereafter 
sufficient to clearly illustrate the patterns 
of considerations and benefits, including 
but not limited to, the twentieth contract 
year and at least one year from 60-70 
and at the scheduled commencement of 
annuity payments: 

(A) The gross annual or single consider- 
ation for the annuity contract. Any 
additional considerations for optional 
benefits, such as disability premium 
waiver, should be shown separately. 

(B) Scheduled annual or single deposit 
for the deposit fund, if any. 

(C) The total guaranteed death benefit 
and cash surrender value at the end of 
the year or, if no guaranteed cash sur- 
render values are provided, the total 
guaranteed paid-up annuity at the end 
of the year. Values for deposit fund 
must be shown separately from those 
for a basic contract. 

(D) The total illustrative benefit and cash 
surrender value or paid-up annuity at 
the end of the year, not greater in 
amount than that based on: 

(I) the current di\idend scale and the 
interest rate credited by the insurer, 
and 

(II) current annuity purchase rates. A 
di\ idend scale or excess interest rate 
wlueh has been publicly declared by 
the insurer with an effective date not 
more than two months subsequent 
to the date of declaration shall be 



551 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



considered a current dividend scale 
or current excess interest rate, 
(iv) A Contract Summar>' which includes 
values based on the current dividend scale 
or the current dividend accumulation or 
excess interest rate, a statement that such 
values are for illustration and are not 
guaranteed. 
(v) A statement of the interest rates used in 
calculating the guaranteed and illustrative 
contract or fund values, 
(vi) The date on which the Contract Sum- 
mary is prepared, 
(vii) Any amounts which remain level for 
two or more contract years may be re- 
presented by a single number if it is clearly 
indicated what amounts are applicable for 
each contract year, 
(viii) Amounts in items (2){c)(i) and (iii) in 
this Rule, m the case of flexible premium 
annuity contracts, shall be detennined ei- 
ther accordmg to an anticipated pattern 
of consideration payments or on the as- 
sumption that considerations payable will 
be one hundred dollars ($100.00) a month 
or one thousand dollars ($1,000) a year, 
(d) Each existing insurer or such insurer's 
agent or broker that undertakes a conser- 
vation shall furnish the pohcy-owner with 
a Polic\- Summary for the existing life in- 
surance or ledger statement containing 
Policy Data on the existing poUcy and/or 
annuity. Such F'olicy Summary or ledger 
statement shall be completed in accord- 
ance with the provisions of N.C.G.S. 
58-213.6 through 213.12, except that in- 
formation relating to premiums, cash val- 
ues, death benefits and dividends, if any, 
shall be computed from the current policy 
year of the existing life insurance. The 
Policy Summary or ledger statement shall 
include the amount of any outstandmg 
indebtedness, the sum of any dividend ac- 
cumulations or additions, and may in- 
clude any other information that is not in 
violation of any regulation or statute. 
Cost indices and equivalent level annual 
dividend figures need not be included. 
When annuities are involved, the disclo- 
sure information shall be that required in 
Subparagraph (2)(c) in this Rule. The 
replacing insurer may 71.1 Sr . t reques t the 
existing insurer to furnish it with a copy 
of the Summaries or ledger statement, 
which shall be within five working days 
of the receipt of the request. 
(3) The replacing insurer shall maintain evi- 
dence of the "Notice Regarding Replace- 



ment", the Policy Summary, the Contract 
Summary and any ledger statements used, 
and a replacement register, listing the re- 
placing agent and existing insurer to be re- 
placed. The existing insurer shall maintain 
evidence of Policy Summaries, Contract 
Summaries or ledger statements used in any 
conservation. Evidence that all require- 
ments were met shall be maintained for at 
least three years or untU the conclusion of 
the next succeeding regular examination by 
the Insurance Department of its state of 
domicile, whichever is earher. 
(4) The replacing insurer shall provide in its 
pohcy or in a separate written notice which 
is delivered with the policy that the apphcant 
has a right to an unconditional refund of all 
premiums paid, which right may be exer- 
cised within a period of twenty days com- 
mencing from the date of dehvery of the 
policy. 

Statutory Authority G.S. 5S-9: 58-42.1; 58-/95; 
58- J 99.' 

.0608 DL TIKS OF INSLRF.RS WITH RESPECT 
TO DIRECT RESPONSE SALES 

(a) If in the sohcitation of a direct response 
sale, the insurer did not propose the replacement, 
and a replacement is involved, the insurer shall 
send to the applicant with the pohcy a Replace- 
ment Notice as described in E'xhibit A or other 
substantially similar form approved by the 
Commissioner. In such instances the insurer 
may delete the last sentence and the references to 
signatures from Exhibit A without having to ob- 
tain approval of the forni from the Commis- 
sioner. 

(b) If the insurer proposed the replacement it 
shall: 

(1) Provide to applicants or prospective ap- 
phcants with or as a part of the applica- 
tion a Replacement Notice as described in 
Exhibit A or other substantially similar 
form approved by the Commissioner. 

(2) Request from the applicant with or as part 
of the apphcation, a list of all existing hfe 
insurance or annuity to be replaced and 
properly identified by name of insurer and 
insured. 

(3) Comply with the requirements of Sootion 
7.B.2., .0607(2)(b) and (c), if the apphcant 
furnishes the names of the existing insur- 
ers, and the requirements of Section 7.C., 
.0607(3), except that it need not maintain 
a replacement register. 



NORTH CAROLINA REGLSTER 



552 



PROPOSED RULES 



Staiulorv Authority G.S. 58-9; 58-42.1; 58-195; 
58-199.' 

.0609 PFNALTIKS 

{a| A violation of this Regulation shall occur 
if an agent, broker or insurer recommends the 
replacement or conservation of an existing policy 
by use of a substantially inaccurate presentation 
or comparison of an existing contract's premiums 
and benefits or dividends and \'alues, if any. Any 
insurer, agent, representative, officer or employee 
of such insurer failing to comply with the re- 
quirements of this Regulation shall be subject to 
such penalties a* may k* appropriate* under ti+e 
Inr . urancJ I av i o. pro\ided for in NC. G.S. 58-42 
and 5X-44.6. 

(b) Patterns of action b\ policyowners who 
purchase replacing policies from the same agent 
or broker, after indicating on applications that 
replacement is not involved, shall be deemed 
prima facie evidence of the agent's or broker's 
knowledge that replacement was intended m 
connection with the sale of those policies, and 
such patterns of action shall be deemed prima 
facie evidence of the agent's or broker's intent to 
violate this Regulation. 

(c) This Regulation does not prohibit the use 
of additional material other than that which is 
required that is not in \iolation of this Regu- 
lation or any other statute or regulation. 

Statuton' .huhority G.S. 58-9; 58-42. 1; 58-195; 
58-199.' 

SF.CTION .0700 - CRKDIT INSl RANGE AM) 

CREDIT LIFE: ACCIDENT AND HEALTH 

INSURANCE 

.0701 LIMITATION ON AMOL NT OF 
CREDIT INSURANCE WRITTEN 

The amount of credit msurance to be written 
by any insurer may be limited by its underwriting 
practices. 

Statutory Authority G.S. 5"-!: 5^-4; 58-9; 
58-344. 

.0702 INSURER LI.\BILITV: PREMIUM 
ACCEI'FED FROM INELIGIBLE 
DEinOR 

If any premium is received for credit insurance 
on an insured debtor who is not eligible under 
the terms of the policy, or for excess insurance 
not co\crcd by the poHcy. the liability of the 
insurer may be Umited to a refund of the pre- 
mium or excess premium to the creditor 
policyholder or the insured debtor. Such refund 
shall be promptly paid or credited to the person 
entitled thereto, and the insured debtor shall be 



notified of such refund and termination of such 
excess or ineligible insurance: provided, however, 
that the insurer shall be liable for any \ahd claims 
arising prior to such refund of premium and no- 
tification to the insured debtor. 



Statutory Authority 
58-344. 



G.S. 57-1; 57-4; 58-9; 



.0703 CALCUL.\TION OF UNEARNED 
PREMIUM REFUNDS: CREDIT 
INSURANCE 

For the purpose of calculating refunds on credit 
insurance no charge for credit insurance may be 
made for the first 15 days of a loan month and a 
fuU may be charged for 16 days or more of a loan 
month: or a refund may be made on a pro rate 
basis for each day within the loan month. 

Statutory' Authority G.S. 58-351. 

.0704 MISSTATEMENT OF AGE: CREDIT 
FIFE AND HEALTH INSURANCE 

The provision on misstatement of age is subject 
to the mcontestible period of the pohcy. 

Statutory Authority G.S. 58-346. 

.0705 REFUND OF UNEARNED PREMIUM 
AF DEATH: CREDIT INSURANCE 

A refund of unearned premium is required in 
the event of death of an insured debtor under a 
life certificate or policy and such refund shall be 
made in accordance with the provisions of 
N.C.G.S. 58-351. 

Statutory- .Authority G.S. 58-351. 

.0706 SUICIDE: CREDIT LIFE INSLR.VNCE 

In the event of the suicide of the insured debtor 
or the joint insured debtor, if any, sane or insane, 
within one year after the effecti\'e date of this 
certiticate, the insurer shall have no Uability with 
respect to such death except for a refund of the 
premium paid, provided, that in the event of 
joint hfe coverage a refund of premiums shall be 
forty percent of the premium paid. 

Statutory- Authority G.S. 58-9; 58-349. 

.0707 NOl ICE OF CLAIM: CREDIT 
INSl R\NCE 

The claimant shall have a minimum of 30 days 
to gi\'e untt^n notice of claim. 

Statutory- Authority G.S. 5'^-l; 5''-4; 58-9; 
58-346. ' 

.0708 AMOL NT OF CREDIT INSURANCE ON 



553 



NORTH CAROLIiXA REGISTER 



PROPOSED RULES 



TRANSACTIONS OK GRRATKR THAN 
120 MONTHS IN Dl RATION 

I'or transactions of greater than 120 months in 
duration, the initial amount of credit life insur- 
ance shall not exceed the amount of contractural 
indebtedness. 

Statutory Authority G.S. 5S-344. 

.0709 I NIFORM DFXREASING COVERAGE: 
CREDIT LIFE 

No policy written, on transactions of 60 months 
or greater in duration, shall incorporate a sched- 
ule of benefits which does not foUow an amorti- 
zation schedule. 

Statutory Authority G.S. 5S-344. 

.0710 ACILARIALLY EQLIVALENT: CREDIT 
LIFE 

With respect to G.S. 5S-3 49 entitled "Credit 
Life Insurance Rate Standards", for credit liff 
insurance on a basis other than the foregoing, 
premiums charged shall be actuarially equivalent, 
is interpreted by the department to mean that the 
actuarially equivalent rates must maintain a sixty 
percent loss ration and must exhibit a composite 
rate equal to the appropriate prima facie rate. 
The loss ratio shall be calculated by dividing the 
present value of future benefits by the present 
value of future premiums. hi calculating the 
present value both interest and mortality rate 
used should reflect anticipated company experi- 
ence. 

Statutory Authority G.S. 5S-349. 

.0711 MOTOR VEHICLE LEASES 

(a) A motor vehicle lease is eligible for Credit 
Life and Credit Accident and I lealth insurance if: 

(1) the lesses has assumed a contractural ob- 
ligation to make payments as compen- 
sation for use of the leased vehicle, 

(2) the total of all payments which the lesses 
is contractually obligated to make for such 
use cither exceeds or is substantially equal 
to the value of the property when leased, 
and 

(3) the term of the lease does not exceed 15 
years. 

(b) Where the lessee's contractural obligation 
uicludes pa\ing or guaranteeing a lump sum (the 
"residual amount") at the end of the periodic 
payment schedule, the insurance may cover the 
sum of aU periodic payments plus the residual 
amount. The residual amount will be included 
in determining the total of all payments for pur- 
poses of (a) - (b) in this Rule. 



(c) Where upon the lessee's death the lessee's 
estate is obligated to purchase the leased vehicle 
at a price stated in or determinable under the 
lease, Credit Life insurance may written to pro- 
vide a death benefit equal to: 

(1) the sum of all remaining periodic pay- 
ments required under the lease plus any 
residual amount stated in or detenninable 
under the lease; or 

(2) the purchase price at the time of the 
lessee's death as stated in or determinable 
under the lease. The sum of all periodic 
payments together with any lump sum 
residual amount will be included in deter- 
mining with the total of purposes of (a) - 
(b) in this Rule. 

(d) Where neither the lessee's not the lessee's 
estate has any obligation with regard to purchase 
of the leased vehicle or payment or guarantee of 
any residual amount, Credit Life insurance may 
be written to provide a death benefit which is 
equal to the sum of all remaining periodic in- 
stallments required under the terms of the lease. 

(e) Credit Accident and Health insurance may 
be written to cover only the periodic payments 
required under the lease. 

(f) In addition to aU other applicable require- 
ments for Credit Life insurance and Credit Acci- 
dent and Health insurance, and subject to (a) - 
(e) in this Rule, the following information must 
be fully disclosed in the certificate or the policy 
of insurance and the lease contract when Credit 
Life or Credit Accident and Health insurance is 
provided in connection with a leasing contract: 

(1) the identity of the lessee, designated as 
such; 

(2) the identity of any co-lessee, designated as 
such; 

(3) the identity of the lessor, designated as 
such; 

(4) the amount of the periodic lease payment 
being insured; 

(5) the residual amount, if any, insured for 
Credit Life insurance; 

(6) the premium for Credit Life insurance on 
periodic payments under the lease (if pro- 
vided); 

(7) the premium for Credit Life insurance on 
any residual amount (if provided); 

(8) the premium, if any, for Credit Accident 
and Health insurance under the lease (if 
provided). 

(g) Whenever a Credit Life insurance certificate 
or policy provides or may pro\idc Credit Life 
insurance applicable to a residual amount, such 
policy or certificate shall include a disclosure as 
to whether Credit Life insurance is or is not ap- 
plicable to the residual amount or a statement 



NOR TH CA R OLINA R EG IS TER 



554 



PROPOSED RULES 



dcscrihing the conditions under which Credit Life 
insurance uill apply to the residual amount. 



Slalulon 

58-342(9] 



Authority G.S. 5S-34I; 58-342: 



n UK 15 DIPAR IMKM OF NATURAL 

RKSOl RCKS AM) COMMLMTY 

DE\EL()PMi:\T 



ly otice is hereby gh-cn in accordance with G.S. 
I50B-I2 that the Wildlife R -'ources Commission 
intends to amend n/leis . ...t as 15 SCAC I OF 
.0330. 



Th 



he proposed effecti\'c u'.u'- 
JanuaiT I. 1989. 



of this action is 



Th 



he public hearing will be conducted at 9:00 
a.m. on October 17, 1 988 at Room 386, Archdale 
Building. 512 Sorth Sahsbwy Street, Raleigh, 
\ C. 



Co 



omment Procedures: Interested persons may 
present their ^■ie^^^s either orally or in writing at the 
hearing. In addition, the record of hearing will 
be open for receipt of written comments from Oc- 
tober I to Sovember I, 1988. Such written com- 
ments must be delivered or mailed to the Wildlite 
Commission. 512 A'. Salisbury St.. Raleigh. \C 
2"61I. 

CHAPTER 10 - WILDI IFE RESOL RCES AND 
\\ ATER SAFETY 

SLBCMAPTER lOF - MOTORBOATS AND 
WATER SAl ET^ 

SECnON .0300 - I OCAF \\ AIER SAFETY 
RE(;i LAIIONS 

.0330 t.\R lERET COFNTY 

(a) Regulated .Veas. This Rule applies to the 
following waters in Carteret County: 

(1) that portion of the Intracoastal \Vater^vay 
within 200 feet on each side of the en- 
trance to Sea Gate Marina: 

(2 1 the waters of Money Island Slough be- 
ginning at the east end of Money Island 
near the Anchorage Marina Basin and 
ending at the west end of Money Island 
where Brooks Avenue deadends at the 
slough; 

(3) the waters of Taylor Creek located within 
the territorial limits of the Town of 
Beaufort: 

(4) the waters of Pelletier Creek beginning at 
the entrance to Pelletier Creek at the 



Intracoastal Waterway and ending at U.S. 
Highway 70; 

(5) the waters of Boguc Sound in Morehead 
City between Sugar Loaf Island and the 
seawall on the south side of Evans, 
Shepard and Shackleford Streets and 
bounded on the east by the Slate Ports 
Authority and on the west by the eastern 
right-of-way margin of South 13th Street 
extended; 

(6) the waters of Cedar Island Bav and Harbor 
from L.S. 70 to Cedar Island Bav Chan- 
nel I ight 8 

Statutory Authority G.S. O.-Fi; 75 A- 15. 
****************** 



lyotice is hereby ghen in accordance with G.S. 
I50B-I2 that the \RCD - Di\-ision of Community 
.Assistance intends to amend rule(s) cited as 15 
\C.\C I3L .0907(f). 

1 he proposed effective date of this action is 
January I. 1989. 

1 he public hearing will be conducted at 10:00 
a.m. on October 19. 1988 at Ground Floor Con- 
ference Room, Archdale Building. 512 A'. 
Salisbury Street. Raleigh. \.C. 

(^ omment Procedures: Comments may be pre- 
sented at the hearing or submitted by mail to: 
Robert E. Chandler, Director 
Division of Community Assistance 
P.O. Bo.x 27687 
Raleigh, \.C. 27611-7687 

CHAPTER \?, - Dl\ FSION OF COMMFNIFY 
ASSFSTANCE 

SFBCMAPTER 13F - NORFH CAROFINA 

COMMFNEFY DEYEFOPMENT BFOCK GR.\NT 

PROGRAM 

SECnON .0900 - GRANT AD.MINISTRATION 

.0907 PROGRAM INCOME 

(f) Program Income generated by grants made 
in 1^86 or aftenvards shall be returned to NRCD 
except when: 

(1) the recipient shall, at the time of applica- 
tion, propose a use or uses for the pro- 
jected program income, and 

(2) NRCD determines that, at the time of 
application, the proposed use of the pro- 
jected program income meets federal re- 



.■>.">-■) 



SORTH CAROLINA REGISTER 



PROPOSED RULES 



quircmcnts prohibiting the state from 
recapturing the program income; or 
(3) the recipient, designated at the time of the 
preliminary' grant auard as a "severely 
distressed county" pu rsuant to G.S. 105- 
13().4()(c). or a city in such a county , 
wishes to retain the program income to 
establish a local economic development 
re\olving loan lund. Anv actis'ities that 
are eligible under Ijtle 1 of the federal 
Housing and (.'onri! nit\' l)e\elopment 
Act ot^^ l')74, as amended (I'.l . 93-383), 
and that meet at least one of the three 
national ob|ecti\es of the Housing and 
(.\MTimunity De\e l(MM nent Act may be 
undertaken. H the eicsignation. pursuan t 
to Ci.S. ll)5-130-4()(c), as a "severely dis- 
tressed county" IS I ■ ■ 1 • -ycd from a county, 
projects ha\ing n-cen cd at least a prelim 
inar\ grant award ' i m to the removal of 
the designation .i . , continue to retain 
proijam income resulting Irom that grant 
as pro\ idcd in this subsection. {Provisions 
of 15 NCAC 13L .0913 apply at the time 
of closeout. 

AuihoriiY G.S. l43-32.'i: I43B-I0: 24 C.F.R. 
570.4S9: 24 C.F.R. 570.494; 42 U.S.C.A. 
5304(b) (4). 



J\ otice is hereby given in accordance with G.S. 
I50D-I2 that the Department of \'atural Re- 
sources and Community Development - Division 
of Economic Opportunity intends to adopt rule(s) 
cited as 15 XC.iC I6C .0113: and amend rule(s) 
cited as 15 NCAC I6D .0201. 

1 he proposed effecti\'e date of this action is 
.January I, I9S9. 

1 he public hearing will be conducted at 10:00 
a.m. on October IS, 19HH at Ground Floor Hear- 
ing Room. Archdale Bldg.. 512 N. Salisbwy St., 
Raleigh, North Carolina 276/ /. 

v_ ommenl Procedures: All interested persons 
are invited to attend. Comments may be submit- 
ted in writing or may be presented orally at the 
hearing. Oral presentations which exceed three 
minutes are requested to hti\'e a written copy to 
be filed with the hearing clerk. Further details of 
the proposed amendments may be obtained by 
writing or calling: Mr. James L. Forte Director, 
Division of Economic Opportunity, Post Office 



Box 27687, Raleigh, NC 27611. Phone: (919) 
733-2633. 

CHAPTER 16 - DIVISION OF ECONOMIC 
OPPORTl NITY 

SUBCHAPTER 16C - COMMUNITY SERVICES 
BLOCK GRANT PROGRAM 

SECTION .0100 - GENERAL PROV ISIONS 

0113 ADMINISTRATION COSTS 

(a) Eligible grant recipients may expend CSBG 
funds for the administration of agency programs. 
Such programs must have purposes consistent 
with those of the Community Services Block 
■"ant. 

(b) The maximum amount of CSBG funds that 
may be used for agency programs shall be limited 
iu ten percent of the total annual budget of the 
eligible grant recipient, as certified in the prior 
sear's audit. 

(c) Administration costs shall include direct 
and indirect costs associated with general man- 
agement and support functions of a specific pro- 
gram, project or agency. Such costs must: 

(1) be necessary and reasonable for the proper 
and efficient administration of the pro- 
gram, project or agency; 

(2) conform to any hmitations or exclusions 
set forth in this Subchapter; 

(3) be accorded consistent treatment through 
application of generally accepted account- 
ing principles appropriate to the circum- 
stances; and 

(4) not be included as a cost to any other 
program fmanced with federal, state, or 
local funds in cither the current or a prior 
period. 

(d) F.ligible grant recipients shall provide the 
division the following information, initially and 
on a quarterly basis when funds are being utilized 
for agency administration costs: 

(1) the total agency budget by program fund- 
ing source; 

(2) the amount of administration funds pro- 
vided by each program; 

(3) the criteria for determining the amount of 
funds used for administrative expenses; 
and 

(4) the number of persons served by each 
program. 

Statutory Authority G.S. 113-28.21, el. seq.; 
l43-323(d); /43B-'/0; I43B-276: 143B-277. 

SLBCIIAP1ER 16D - COMMl Nil \ A( HON 
PARINERSIIIP PROGRAM 



NORTH CAROLINA REGISTER 



556 



PROPOSED RULES 



SKCI ION .0200 - ADMIMS IR \TI\ K POLICIF.S 
AM) PKOCKDl RfcS 

.0201 GKNKRAL PRO\ ISION 

(a) The pro\ibions of Subchapters 16B, C, and 
D of this Chapter shaU govern administration of 
funds by grant recipients under the Community 
Action Partnership Program, except that in the 
case of conflicts among the provisions of Sub- 
chapters 16B, 16C and 16D, the provisions of 
Subchapter 16D shall govern. 

(b) Funds shall not be used to purchase or 
impro\'e land or to purchase, construct, or per- 
manently Improve buildings or facilities, other 
than for low-cost residential weathcrization or 
cnerg)-rclated home repairs. 

ftrf A ma^mium e4 fifty percijnt ©f funds alio 
Ciitc ' d te aft oligibk' agoncy hȴ be W7e4 te defray 
{-he admini '. trati' i L ' CKp^ ' nC ' t ' e^f programs oth e r 
than tho '' L ' operated v. itb Community SoP i icos 
Block (kant funds. Such pni grams must have 
puqioses consist e nt V i itli thosL ' t4 the Cominu 
ftfty Sen ices Block Grant. 

Administrati' . e expense trf other programs shall 
mclude direct e* mduect costs associated >sith 
general miuiagement afi4 support functions ef a 
specihc program &f project. Such costs must: 
H-) be nece 'i'. apr aH4 roa ' . ' Onable fof (4^ proper 
a«4 effici e nt administration e+' the pro 
gram ©f project: 
(-3^ conform (+» aftv limitations e-F exclusions 

set- forth » )44^ Subchapter; 
f^ be accorded consi -. t e nt treatment througli 
application ef generally accepted account 
m% principl e s appropriate te t4*e circum 
stance ' - ' ; rtft4 
f4f »*+<■ be allocable te- ef included a* a ee** 
t«- awy- other juogiam linanced V i ith fed- 
eFalr ' .itate, ef local funds m- either the 
curr e nt »f a prior period. 

(c) No funds allocated to an eligible agency 
under this subtitle may be used to defray admin- 
istration costs of this or other programs. Ad- 
ministration costs are direct or indirect costs 
associated with general management and support 
functions of a specific program, pro|cct or 



Slaluton' Authority G.S. 1I3-2S.2I, et. seq.; 
143B-l6. 

I 111 K 23 - SIATK BOARD OF 

COMMIMIV COLI.KGKS/DKPARTMLM 

OF COMMUMTV ( OLLtX.ES 



1\ oticc is hereby gi\-en in accordance with G.S. 
I SOB- 1 2 that the State Board of Community 



Colleges! Department of Community Colleges in- 
tends to amend rule(s) cited as 23 NCAC 2D 
.0301 and 23 NCAC 2D .0328. 

1 he proposed effective date of this action is 
January /, I9S9. 

1 he public hearing will be conducted at 10:00 
a.m. on October 25, I98S at First Floor. State 
Board Conference Room, Caswell Building, 200 
IV. Jones Street, Raleigh, N.C. 27603-/337. 



Co 



omment Procedures: A ten-minute time limit 
per person may be imposed for oral presentations. 
Fhe number of persons making oral presentations 
may be limited in order to stay within the time 
a\-ailable. lndi\iduals who plan to make oral 
presentations must submit their remarks in writing 
to the hearing officer. This procedure will assist 
the hearing officer in organizing and reporting in- 
formation to the SBCC. Written statements not 
to be presented at the hearing should be directed 
to Mr. Larry Morgan, Hearing Officer, Depart- 
ment of Community Colleges, 200 IV. Jones 
Street. Raleigh. N.C. 27603-/337 bv October /7. 
/9S8. 

CHAPTER 2 - COMMUMTV COLLEGE 

M IK MAPI KR 21) - INSTITLTIONS: FISCAL 
AI I AIRS 

SECTION .0.100 - BLDC.ETING: ACCOUNTING: 
FISCAL MANAGE.MENT 

.0.301 OPERA IING BUDGET REQUESTS: 
DIS I RIBU I ION OF FUNDS 

fa) General: 

(Ij One full-time equivalent (FTP) student 
represents sixteen student membership 
hours per week for 11 weeks or 176 stu- 
dent membership hours for each quarter 
enrolled. Refef to jj- NCAC 3^ .n.-J23(a) 
fe* additional information regarding eal- 
culating aft4 reporting student member 
^4*tf> hours. 

(2) Rule 23 NCAC 2D .0324 sets forth the 
specific categories for which FTE shall be 
calculated, fhe operating budget funds 
r e fened te- ift thtt' Rule refer only te the 
foUov i' ing ''regular budget" catogoriou: 
(A) curriculum: 
(+)• college transfer. 
f«-^ ge neral education, 
{mj- technical, 
(+¥4 i i ocational. 
f©^ continuing education: 
fi^ adult h«h school. 
{iij occupational extension, 



557 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



(4+i-^ oth e r e xtunfjion, 
(w) adult basic LMJucation. 
(3) Projections of full-time equivalent (FTE) 
students will be based on the following: 

(A) Curriculum I-TIi projections will be 
based on the three-quarter academic year 
(fall, winter, spring). 

(B) Continuing education FTE projections 
wiU be based on the full four-quarter fiscal 
year (summer, fall winter, spring). 

(C) Projections will I'.: made, program by 
program, utilizing actual P'TE for the 
most recent five-year period. 

(D) The State Board may adjust the pro- 
jections based on additional factors 
brought to its attention. 

(E) The State Board will adopt an ofTicial 
projection of ETl;. 

(b) Appropriation Requests: 

(1) Continuation Budget Requests. The 
continuation bud^!''t request will be based 
on the number of 1- IE and amount per 
FTE currently appropriated and increases 
in the continuation budget as directed by 
the Office of State Budget and Manage- 
ment. Also included in the continuation 
budget requests wiU be continuing pro- 
grams that are funded apart from the for- 
mula budget such as new industry, human 
resources development, etc. 

(2) Expansion Budget Requests. The expan- 
sion budget requests may consist of, but 
is not limited to, the following items: 

(A) an adjustment in the number of FTEs 
in existing programs based on the differ- 
ence between the official E IE projections 
of the State Board and the existing level 
of FTEs requested in the continuation 
budget, 

(B) an adjustment in expenditure per FTE, 

(C) additional funding for new and special 
programs of instruction. 

(c) Allotment Reserve. A reser\'e will be re- 
quested from the General Assembly and shall be 
retained by the State Board for the purpose of 
making later allocations for enrolhnent growth, 
innovative programs, new concepts, etc. 

(4) Formula di i itribution ef funds fof the oper 
ating budgL ' t vrtll be based &» t4%e following foe- 

f4-^ Base iMlolmonts 

(A) Bust' budgets fef the coming fi ; ical yeaf 
fof cnrriculum programs shall be based 
eft the actual fall FTE, actual winter FTE, 
aft4 the projected spring F IFj from the 
current fiscal year. T4*e proj e cted spring 
F 1 Fj will be certified by tl*e institutional 
president at- the eft4 ef the 3^ percent te- 



porting date. (?ontmuing education pie- 
gramo base budu e t fop t4*e coming yeaf 
shall be based eft the actual spnng FIE, 
actual summer ETE, actual fell El E, aft4 
actual winter I'TE fef the latest a' i 'ailablo 
quarters, tf suflicient F'l E i» aet- pro- i ided 
by the General Assomhly, e ach institution 
will r e c e iv e » prorata reduction. 
fB) Additional FTE available shall be dis- 
tnbuted te each institution by curriculum 
»f continuing tnl' ioation program afea »» 
a prorata basis el the institution's actual 
FTE B% compared te the total system 

(€^ ^l^ the esteftt- the projected curriculum 

the actual spring quarter FTE, adjust 
ments vrtH be made te incr e ase ef d e creas e 
the FTE by \\\^i• conclusion ef the foU ae- 
ademio quart e r. 
(©) 1ft the e'rent sufficient ETE is aet- pro 
\idod te meet all the above pro' i isions i» 
Parts A-G ef tlft* Rule, the department 
win 6ft* apply Part At 
(-3) Funds w+H be allotted te each institution 
e» the fell loosing formula: 
(A) Lnstructicm: 
fif curriculum: 

f4^ instructional ftftit — eae pef 33 FTE 

rounded te the n e arest 1/10 «ftit- at- the 

currently appropnated salar)' ftftit- va- 

fH^ employe e benefits — based eft ap- 
propriated les'els fof social security, 
retirement, aft4 hospitalL i '.ution; 

(III) other costs pep curriculum ETE 
based eft appropriated levels fof 
trav e l aft4 supphes aft4 mat e rials; 

(«-^ continuing education: 
fih-)- Adult Bas i io Education: 

fl^ ins . tructional Hftft — ewe pef 33 FTE 

rounded te the nearest 1/10 tHWt- at- the 
currently appropriated salary Hftit- va- 

(444 employee benefits based eft ap- 
propriated lev e ls fe* soeiai security, 

retirement, an4 hospitalization; 

(444^ other costs jF>eF curriculum FTE 
based eft appropriated levels fof 
travel aft4 supplies aft4 mat e rials; 
(iv) Oth e r Continuing Education 

(i) instaictional eftit — eee pet 33 FTE 
rounded te the nearest 1 / 1 eftit- at- 
the currently appropriated salaP i ' «ftit- 

(44^ employe e benefits based eft ap- 
propriated level fe* social security; 



NORTH CAROLINA REGISTER 



558 



PROPOSED RULES 



f444-^ other cor . ts pef continuing cduca 
t-H*ft I'll'; bii j' ed eft uppropriati-'d kw- 
t4^ fof truvc * ! a»4 fiuppli e- j rtft4 
mat e nul ji ; 
(4i-^ in ; 4ructional fiupport aft4 adimmij 
tnition: 
ft4 A bu ' . ' ij allotment fof each inotitution: 
f4-^ L: . alunL" . — prooidont ( 1 .0) e» proi . idont'o 
[ . ukip . ' xhedulo: oonior udtnini; . trut(^rs 
( ' l.U) a4- t+» curront r . alur> ' tmrt s-alu e ; 
ill '. 1 pactional - juppoil (4^ at- th«^ current 
i . alaPr Hft+4- ' . alue; cl e rical peroonnel f^ 
at- 1+» current ; ' . alaP i' eftrt ' l alue; 
f44-^ employe e benefit 'i bai i ed eft appro 
pnated l e v e ls fof liocial decunty. retir e 
m e nt aft4 ho ' jpitali/'.ation; 
(III) oth e r CO Lit ' J — tfet* current approved 
ba!: .e cunount fof travel fof truL ' teer . , 
pre 'i ident. admini i' trator i . . . i*ft4 support 
peruonnel: institutional dues; gradu 
ation exponooi: . ; et^ 
(«^ Aft additional allotment fef each etH^ 
riculum i*ft4 continuina education bTIt 
fcvf each in^uitution w+ii be ba ' jcd »» A*» 
foUov i ing: 

(-14 salari e s: Senior iVdmini '. tratorr - 
f-fl-H Po '. ition ' ' , pef \m W4- } Current 
Salary Scale: Admini- ' trators e+' ft^**- 
grams - (.173) Po > : . itioiui f^ VM 
('umculum 1 Tb; } (Current SalaPr 
S^tti^ aft4 (-0*4^ Position ;, pef -WU 
CcMUinuing bducation I 'IT' } Current 
Salapy Scale: Instnictional Support - 
(.775) Position - i pef 44iU Cumculum 
[''IF } Current Salary ' Scal e aft4 
(552) Po -i itions f>ef 4-044 (rontinuing 
bducation b Ibj } Current Salapy 
Scal e : Tech; Paraprofessionals - (.50) 
Por i itionr, pef +00 WTi } Current Sa- 
Wy Scale: Clencal Perr . onn e l - (.7( 1 ) 
I'oL i itioni i p^ -WO WT* } Current Sa- 
ktfv Scale. 
(44^ employee benefito based eft ap- 
propnated leveh) tftf i . ocial oecurity. 
retirement af^ hospitcdi/iition: 
(444-) other cost ' ' , ft^^ bTb ba ' .' . ed eft 
appropriat e d levels fof travel, r . up 
pli e s aft4 matenab:;, postage, printing 
aft4 binding, magai'ines aft4 nev . spa 
pers. equipment repair ! ' . , ! i ep . 'ice Stf^ 
maintenance contracto, advertising 
aft4 publicity, eter 
(d) Formula distribution of funds for the cur- 
rent operation budget. Fimds appropriated to 
the State Board of Conimunit\' Colleges for cur- 
rent operation shall be allocated to the s\stcm 
colleges \n accordance with formulas and Q^roce- 



dures cstabHshed bv the State Board of Com- 



munitv Colleges, or as directed bv the General 
Assembly. Formulas and procedures to allocate 
funds shall be published in the Accounting Pro- 
cedures Manual, North Carolina Department of 
Community Colleges. 

(e) J'I'PA Administrative Allotment. Student 
class hours for class size projects funded by the 
Job Training Partnership Act (JTPA) may not 
be included in the full-time equivalent (FTE) 
formula for eamjing Budget FTE. Administrative 
t^unds for operating these class size projects shall 
be allocated on the same basis as all other ad- 
ministrative formula funds. 

Statutory Authority G.S. IJ5D-3; I15D-5; 
II5D-54. 

.0328 THE FLLL-TIME EQLIVALENT 
(FTE) SYSTEM 

The following categories of FTE will be calcu- 
lated by the Department; 

(1) college transfer education curriculum pro- 
grams, 

(2) general education cumculum programs, 

(3) technical education curriculum programs, 

(4) vocational education curriculum programs, 

(5) academic extension programs, 

(6) adult high school extension programs, 

(7) a vocational extension programs, 

(8) occupational extension programs, 

(9) practical skills extension programs, 

(10) state funded A*fe Adult Basic Education 
programs, 

(11) learning laboratory, 

(4-^ federal funded ABE programs, 

( 12) (44) comprehensive employment aft4 
training job training partnership act pro- 
grams, 

( 1.3) (4-H new and expanding industry programs, 

( 14) (-14^ human resources de\'elopment pro- 
grams, 

(15) (44) self-supporting and recreational pro- 
grams. 

Statutory^ Authority G.S. 1150-5: S.L. 1981 c. 
859 S.32, 33; S.L. 'l9Sl c. 1282 s.36. 

TITLE 25 - OFFICE OF STATE 
PERSONNEL 



l\otice is hereby given in accordance with G.S. 
150B-12 that the Office of State Personnel! State 
Personnel Commission intends to amend, adopt, 
and or repeal rule fs ) cited as 25 .\CAC ID .1201, 
.I202{f), (g), .1203(b), .1204(e), (g), (h), 
.1207, .1401, .1901 - .1950, .2001 - .2004: IE 
.1005; IJ .0801 - .0809; IK .0603 - .0615. 



559 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



1 he proposed effective dale of this action is 
January /, /9S9. 

1 he public hearing will be conducted at 9:00 
a.m. on October 18, I98S at Office of State Per- 
sonnel Development Center, 101 West Peace 
Street, Raleigh, North Carolina 2761 1. 

C ommcnt Procedures: Interested persons may 
present statements orally or in writing at the 
hearing or in writing prior to the hearing by mail 
addressed to : Drake Maynard, Office of State 
Personnel, 116 W. Jones Street, Raleigh, N.C. 
276/1. 

CHAI* IKK I - OFFICE OF STATE PERSONNEL 

SLBCH AFTER ID - COMPENSATION 

SECTION .1200 - 1 on(;evity pay 

.1201 POLICY 

Longevity pay is to recognize long-term service 
of permanent full-time and permanent part-time 
(half-time or more) employees who have served 
at least ten years with the state. 

Statutory Authority G.S. 126-4. 

.1202 TIME AND METHOD OF PAY 

(f) If an employee transfers between state 
agencies any time during the month or at the end 
of the month in which eligibility requirements are 
met, the receiving agency shall make the longev- 
ity payment based on the salary' in elTect on the 
eligibility date. 

(g) If an eligible employee goes on extended 
militapi' leave without pay, a longevity payment 
computed on a prorata basis shall be paid the 
same as if the empk^yce is separating. 1 he bal- 
ance will be paid when the employee returns and 
completes a full year. Then, a full payment will 
be made on the employee's longevity date that 
was established before going on leave without 
pay. 

Statutory Authority G.S. 126-4. 

.1203 AMOUNT OF LONCKMTY PAY 

(b) For an otherwise eligible employee who 
separates or goes on extended military leave 
without pay before the date of annual eligibility, 
a prorated longevity payment will be made. The 
longevity pay amount shall be computed on the 
salary as of the last day worked; then it is pro- 
rated by an amount equal to the proportion of 
the year worked toward the annual eligibility 
date. The employee will receive 1/12 if the an- 



nual amount for each month worked toward the 
next longevity payment. For example, if an em- 
ployee received longevity on January 1 and sep- 
arates on July 31, 7/12 of the full longevity 
payment would be paid. The payment should 
be made to the nearest cent rather than the 
nearest dollar. 

Statutory Authority G.S. 126-4. 

.1204 ELIGIBILITY REQUIREMENTS FOR 

PERMANENT Fl LL-TIME EMPLOYEES 

(e) Upon change of appointment to temporary, 
part time, or exempt, the employee is ineligible 
for continued longevity pay; hence, if the em- 
ployee has worked part but not all of one year 
since the last annual longevity payment, a pro 
rata payment shall be made as if the employee 
were separating from State service provided the 
change is not of a temporary nature. If an em- 
ployee goes on leave without pay (except ex- 
tended military leave without pay in which case 
a prorated amount is paid, and workers' com- 
pensation leave in which case longevity is paid to 
the employee as if working), longevity would not 
be paid until the employee returns and completes 
the full year. If, however, the employee should 
resign while on leave without pay, then the pro 
rata amount for which eligible is paid. 

(g) Aggregate service is the time for fuU-time 
or part-time (half-time or over) permanent, trai- 
nee, probationar>' or provisional employment, 
whether subject to or exempt from the State 
Personnel Act. If a» a permanent full-time em- 
ployee is in pay status (working, exhausting va- 
cation or sick leave, or drawing worker's 
compensation) or is on authorized militan,' leave 
for one-half or more of the regularly scheduled 
workdays in a month, credit shall be given for the 
entire month. Permanent part-time employment 
is credited as aggregated service on a pro rata 
basis - it is computed as a percentage of the 
amount the employee would be credit if perma- 
nent fuU-time. 

(h) Credit shall also be given for: 

( 1) F'mployment with other governmental 
units which are now state agencies (Ex- 
amples: county highway maintenance 
forces. War Manpower Commission, Ju- 
dicial System). 

(2) Authorized militar\' leave from any of the 
governmental units for which service cre- 
dit is granted provided the employee is 
reinstated within the time limits outlined 
in the state military lea\-e policies. 

(3) Employment with the county Agricultural 
Extension Service; C?ommunity College 
System and the public school system of 



NORTH CAROLINA REGISTER 



560 



PROPOSED RULES 



North Carolina, with the pro\ision that a 
school year is equi\alcnt to one full year 
(credit for a partial year is gi\en on a 
inonth-for-month basis for the actual 
months worked). 

(4| [-mrlo\ment with a local Mental Health, 
Public Health. Social Senices or Fmer- 
genc\' Management agenc\" in North Ca- 
rolina if >uch employment is subject to 
the Slate Personnel .Act. 

(5) hmpUnment v.ilh the General Assembly 
(except for participants in the I egislatiye 
Intern Prouam and paizes). ■■VU of the 
time, both permanent and temporan'. of 
the emploNces w ill be counted: and the 
full leaslati\e terms of the members. 

SidtutoiT Auihoritv G.S. J 26-4, 5 j, 1 10 j; Sec. 46, 
Chapier I2S2, 1981 Session Lmvs. 

.1207 SPKCIAL PROMSIONS FOR 
PART-TIME EMPLOYEES 

(a) Permanent part-time (one-half time or 
more) shall be eligible for prorated longevity pay 
based on total state sen.ice. For example, if an 
employee has ten years of half-time employment, 
he would be ehgible for 1.50 percent (or one-half 
of 1.5(J percent of a full-time longevity payment). 

(b) If the employee changes to full-time em- 
ployment, the service will have to be converted 
to aggregate senice (five years in the example 
abo\e); ho\\e\er. the employee shall continue to 
recei\"e the pro-rated payment until he has com- 
pleted sutTicient time to qualify for a full-time 
payment. 

(c) Total State Service Defined. Total state 
sen.ice is the time of full-time or part-time (hall"- 
time or o\er) permanent, trainee, probationary 
or provisional employment whether subject to 
or exempt from the State Personnel Act. If an 
employee so appointed is in pay status fw orking, 
exhausting vacation or sick leave, or on \^'orkers' 
Compensation Lea\e) or is on authorized mili- 
tary leave for one-half or more of the regularly 
scheduled workdays in a month, credit shall be 
given for the entire month. Permanent part-time 
employees are credited with total state service on 
a month for month basis the same as permanent 
fuU-time employees. They wiU recei\'e a full 
month of credit for each month they work one 
hall" or more of their scheduled workdays. 

Stalutory Authority G.S. 126-4. 

SEC TION .1400 - SlIU T i'REMIlM PAY 

.1401 POLICY 



It is a policy of the state to pro\ide additional 
compensation for non-medically related employ- 
ees through salary grade 69 and for medically re- 
lated employees through salary grade +^ 75 who 
are regularly scheduled to work on either an ev- 
ening or night shift: 

(1 ) A permanent. probationar\- or trainee em- 
ployee who is eligible for shift premium pay 
shall receive premium pay for awy all hours 
in a worked tf in which more than hall~ of the 
scheduled working hours occur between 4:00 
p.m. and S:00 a.m. on a regular recurring 
basis. 

(Pxception: Pmplovces on a permanent 
tweh'e-hour day shift shall be paid shift pay 
for the hours actualh" wcirkcd between 4:1J0 
p.m. and S:(l(i a.m.) 

Interpretation: 'Regularly recurring" shall 
be interpreted to mean a position that re- 
quires a daily schedule that is repeated at 
specified intervals for an indefinite period of 
tune. In addition, an emplo\ee required to 
substitute m a position because of \ acancv 
or the incumbent "s absence that is eligible 
for shift premium shall recei\e such payment 
for time worked m that position. 

fO-^ 44*e premium pay fep wty **f» ?4h4+ oh all 
apply tt* all hours ' . vorki?d althougli all houro 
V f 'orked dunng Aat- rliift may FH+t fell V i itliin 
the i . tutL ' d penod. 

f3-^ (22 Employees shall not receive shift pre- 
mium pay for hours not actually worked. 
This exclusion includes such time periods as 
annual leave, hohdays. illness, jury duty and 
mOitary leave. 

(-4-^ (3| Shift premium pay shall be granted in 
addition to any other premium pay to which 
the employee may be entitled, such as holi- 
day pay. 

f§-^ (4| Shift premium pay is not considered as 
a part of annual base pay for classification 
and pay purposes, nor is it to be recorded in 
personnel records as a part of annual base 
salary. However, under the state's pohcy 
on hours of work and overtime compen- 
sation, shift premium pay must be included 
in the calculation of the regular hourly rate 
of pay for the purposes of computing o\"er- 
time. 

(5) Spht Shifts. An employee 'A'orking a reg- 
ularh' recumng split shift shall receive pre- 
mium pay m accordance \Mth this Rule if 
more thrn half of the hours occur between 
4:1'>0 p.m. and S:00 a.m. If howc'er. only 
half or less of the hours are in the stated 
penod. the emplo\"ee will recene shilt pre- 
mium pa\ only for the actual hours worked 
between 4:1)1') p.m. and S:00 a.m. 



561 



AORTH CAROLINA REGISTER 



PROPOSED RULES 



Sialulon Authotitv G.S. 126-4: Session Laws 
I9S7, Chapter 7 3S', Section 9; Session Laws 1988, 
Chapter 1086, Section 100. 



SKC HON .1900 - IIOIRS OK WORK 
OVERTIME rOMPENSAIION 



AND 



.1901 MIMMIM WAGE (RKl'EAI.ED) 
.1902 ON ERIIME COMPENSAEION 

(RKI'EALEO) 
.1903 EXEMI'I EMIM OVEES (REPEAI ED) 
.1904 SALARY (REPEALED) 
.1905 rOMPENSAEION (REI'EAEED) 
.1906 HOI RE^ RVEE OF PA^ (REPEALED) 
.1907 NON-OVERTIME WORKWEEKS 

(REPEALED) 
.1908 THE WORKWEEK (REPEALED) 
.1909 IIOLRS WORKED (REPEALED) 
.1910 I NAl mORI/ED WORK (REPEALED) 
.1911 ON CALL (REPEALED) 
.1912 VACATION: SICK LEAN E: 

IIOI IDANS (REPEALED) 
.1913 MEAL PERIOD (REPEALED) 
.1914 (;RIEN ANCE TIME (REPEALED) 
.1915 I RAINING TIME (REPEALED) 
.1916 IRAN EL riME (REPEALED) 
.1917 RECORDKEEPING (REPEALED) 
.1918 ENEORCEMEN I (REPEALED) 
.1919 EXECLTINE: ADMINIS IRA LIVE: 

PROl ESSIONAl EMPLONEES 

(REPEALED) 
.1920 EXEC LI IN E EMPLON EES (REPEALED) 
.1921 ADMINISIRAIINE EMPI.ONEES 

(REPEALED) 
.1922 PROFESSIONAL EMPLOYEES 

(REPEALED) 
.1923 SPECIAL PROVISIONS (REPEALED) 

Statutory Authority G.S. 126-4. 

.1924 MINIMLM NVAGE 

r.niployccs must be paid not less than three 
dollars and thirty-five cents ($3.35) per hour mi- 
nimum wage. A review of aU payrolls should be 
made to assure that all employees arc receiving 
at least the statutorily required rate. 

Statutory Authority G.S. 126-4. 

.1925 ON ERI IME COMPENSATION 

(a) The pa>mcnt of premium time and one-half 
rates in form of monetary compensation or time 
off is required for hours worked in excess of 40 
within a work week, with exception of those 
considered exempt as Executive, Administrative, 
or Professional employees. 

(b) Agency heads and supervisors shall hold 
hours worked by the employee to the state's es- 
tablished 40-hour workweek standard except in 
those cases where excess hours of work are nec- 
essary because of weather conditions, necessary 



seasonal activity or emergencies. It shall be a 
responsibility of each agency or executi\e head 
to determine that the provisions of the state's 
policy on overtime pay are administered in the 
best interest of the state. 

(c) Although each agency head is responsible 
for the manner in which overtime is authorized, 
it is equally important to control unauthoriy.cd 
overtime. Unauthon/.ed work shall be counted 
as hours worked if the employer should have 
stopped it but did not, or if the employer knows 
or has reason to know of this practice. Each 
agency is responsible for internal controls wliich 
will provide a means of reviewing and evaluating 
the use of overtime. 

(d) The practice of overtime work wiU be sub- 
ject to review by the Office of State Personnel. 
Such review will take into consideration organ- 
izational structure, scheduling of work, position 
complement, and personnel classifications. 

Statutory Authority G.S. 126-4. 

.1926 EXEMPT EMPLOYEES 

Each agency head has the responsibility to de- 
termine which employees are exempt from hours 
of work and overtime pay rules and procedures 
under the terms of exemptions as set out in this 
Section. The Office of State Personnel wiU pro- 
vide ad\'ice, technical assistance and oversight to 
agencies and uni\ersities on this responsibility. 

Statutory Authority G.S. 126-4. 

.1927 SALARN 

The annual and monthly salary rates of an em- 
ployee are established under current personnel 
policy for each position. This salary is to repre- 
sent the employees' straight-time (as opposed to 
overtime) pay for standard 40-hour workweek. 

Statutory Authority G.S. 126-4 

.1928 COMPENSATION 

(a) The employee is to receive straiglit-time pay 
for a standard 40-hour workweek, with the pro- 
vision that an additional amount equal to time 
and one-half the employee's regular hourly rate 
multiplied by the number of hours worked in 
excess of 40 will be added to the base pay. Such 
payment must be made in form of monetary 
compensation or compensable time otf. It is the 
poUcy of the State of North Carolina, whenever 
possible, to give compensatory time off in Hcu 
of monetary compensation for hours worked in 
excess of 40 hours per work week. The decision 
as to whether to give compensatory time off, 
rather than monetarv compensation, for overtime 



NORTH CAROLINA REGISTER 



562 



PROPOSED RULES 



worked is solely within the discretion of man- 
agement. Compensator, time off shall be sche- 
duled by management, although reasonable effort 
should be made to accommodate the employee 
as to such scheduling. 

(b) .An employee shall be gi\cn compensatory 
time off on the basis of one and one-hall' times 
the amount of time worked beyond 40 hours 
during a week; but such time off must be t;iken 
within 30 days from the date the overtime is 
performed or by the end of the following pay 
period, whiche\er is longer. ff compensatory 
time off is not gi\en by the end of the pay period 
following the 30-day period, the overtime pay 
must be included in the employee's next regular 
paycheck. 0\ertime worked shall be recorded 
and compensated in units of one-tenth of an 
hour. NO ri:: The preceding provisions are not 
applicable to persons in law enforcement or fire 
protection acti\'ities and in-residence employees. 

(c) Prior to employment, each successful can- 
didate for state employment in a position subject 
to hours of work and overtime pay standards 
must sign a form acknowledging that it has been 
e.\plamed to him that it is the the state's policy 
to gi\e time off in lieu of monetary compen- 
sation, wherever possible, for hours worked be- 
yond 40 in a work week. Agreement to this is a 
condition of emplo\ment with the state; failure 
or refusal to sign such agreement wiU prevent 
employment of that person. This signed form 
shall be a part of the employee's personnel ffle; 
it must be kept for at least three years following 
that person's separation from state employment. 

(d) Upon tennmation of employment, an em- 
ployee shall be paid for unused compensator)- 
time off at a rate of compensation not less than 
either the average regular rate received by such 
employee during the last three years of the em- 
ployee's emplo\ment or the final regular rate re- 
ceived by such employee, whichever is higher. 

Stalutoty Authority G.S. 126-4. 

.1^29 HOI K\.\ RAIT. OF l',\V 

(a) The hourh' rate of pay is the rate published 
b\ the Office of State Personnel and is obtained 
by dividing the annual salary by 20S0 hours (52 
weeks multiplied by 40 hours per week). 

(b) The rate that must be used in computing 
overtime is referred to as the regular hourly rate. 
The regular hourly rate must include all remun- 
eration for emplo\ment paid to, or on behalf of, 
the employee, except pa\ments specifically ex- 
cluded by the Act. Payments that are not ex- 
cluded and must be included in the hourly rate 
are: 

(ll Shiff Premium Pay; 



(2) I,onge\ity Pay; 

(3) On-Call Compensation. 

These payments must be included in order to 
comply with the provisions of the f'air Labor 
Standards Act (FLSA). 

(c) Longevity pay must be included in the reg- 
ular rate when computing overtime. However, 
to a\oid recomputations when overtime is due, 
the foUowing procedure may be used: At the end 
of each calendar year, the total dollar amount of 
overtime paid is determined and this amount is 
multiplied by the percent of the employee's lon- 
ge\ity pay rate. 

(d) Overtime for ;m employee working in two 
positions with different rates of pay is paid at the 
a\erage of the two rates of pay for each position. 

Statutory Authority G.S. 126-4. 

.1930 NO\-0\EKriMK WORKWFFKS 

WTien an employee works 40 hours or less dur- 
ing a workweek because of vacation, hohdays, 
or sick leave, the regular weekly salar>' is paid in 
accordance with established personnel policies. 

Statutory Authority G.S. 126-4. 

.1931 FUE WORKWKFK 

.\ workweek is a regularly recurring period of 
168 consecutive hours. The workweek need not 
coincide with the calendar week. It may begin 
any day of the week and any hour of the day, but 
it must be in each case be established in advance. 
The workweek may be changed, but only if the 
change is intended to be permanent and is not 
made to evade the overtime policy. /Vny change 
m the established workweek must be approved 
in advance by the Office of State Personnel. 

Statutory .-lulhority G.S. 126-4. 

.1932 HOI RS WORKFD 

Generallv, all time dunng which an employee 
is required, suffered, or pennitted to be on the 
employer's premises on duty or at a prescribed 
work place, except for meals or other periods 
when the employee is free from duty, is consid- 
ered as hours worked. I'his is so even if the du- 
ties arc pleasurable rather than burdensome and 
even if no productive work is actually pertbrmed. 
In the large majority of cases, the determination 
of an employee's working hours will be easily 
calculable under this formula and will include, in 
the ordinary case, :dl hours from the beginning 
of the work day to the end, with the exception 
of periods when the employee is relieved ot all 
duties for the purpose of eating meals. 



.^63 



NORTH CAROLINA REGLSTER 



PROPOSED RULES 



Slatutoty Authority G.S. 126-4. 

.\^^^ LNAL IIIORIZF.I) WORK 

Hours worked by an employee without the 
employer's permission or contrary to instructions 
may or may not be considered as hours worked. 
Unrecorded hours worked during a workweek by 
an employee at the job site or at home must be 
counted as hours worked if the employer knows 
or has reasons to know of such practice. The 
employer must enforce the no -work rule and may 
not unjustly benefit from worked performed 
without knowledge of this Rule. 

Statutory Authority G.S. 126-4. 

.1W4 ON CALL 

(a) rime spent by an employee who is required 
to remain on call on the employer's premises or 
so close thereto that the time cannot be used for 
the employee's own purposes is considered 
working time. Emplosees who are merely re- 
quired to leave word as to where they may be 
reached are not on call in this sense. 

(b) The fact that an employee lives on the 
employer's premises and is on caU for 24 hours 
a day does not mean that the employee is entitled 
to pay for all those hours. Such an employee has 
regular duties to perform, but is subject to work 
at any time in the event of an emergency. Ordi- 
narily, employees have a normal nights sleep, 
ample eating time and may, during certain peri- 
ods, come and go as the employee pleases. 

(c) An agreement should be reached with an 
employee in this category as to the extent of duty 
which wiU make clear the time that should be 
considered as hours not worked. As a rule, al- 
lowance for eight hours sleep and three hours for 
meal periods would be reasonable, plus any other 
hours that the employee may be free of urmeces- 
sary restrictions of use of the time. 

Statutory Authority G.S. J 26-4. 

.1935 VACAl ION: SICK LKAVE AND 
HOLIDAYS 

(a) In determining the number of hours worked 
by an employee within a given week, time spent 
on vacation, sick leave, and holidays will not be 
counted as time worked. 

(b) Such time off must be included in straight- 
time pay, but is not included in computing hours 
of work for overtime pay. 

Statutory Authority G.S. 126-4. 

.19.V, MKAI IM KIOD 



A bona fide meal period is a span of at least 30 
consecutive minutes (never less) during which an 
employee is completely relieved of duty and free 
to use the time for his own puqioses. It is not 
counted as hours worked or paid time. Any so- 
called "meal period" of less than 30 consecutive 
minutes must be paid as hours worked. 

Statutory Authority G.S. 126-4. 

.1937 GRIKVANCETIME 

The time an employee spends during a regular 
work schedule m adjusting a grievance under the 
state procedure on Employee Appeals and 
Grievances is work time. Such time spent out- 
side the employee's regular work schedule is 
work time only if the employee's attendance is 
required by the agency or the state. 

Statutory Authority G.S. 126-4. 

.1938 TRAINING TIME 

Required attendance at training sessions, work- 
shops and other meetings, whether before, during 
or after the employee's regular work schedule, is 
work time. Voluntary attendance at training ses- 
sions, workshops and other meetings is not work 
time. Attendance is voluntary only if the em- 
ployee is not led to believe that working condi- 
tions or continued employment would be 
adversely affected by nonattcndance. 

Statutory Authority G.S. 126-4. 

.19.^9 TRAVEL TI\1E 

(a) Whether travel time is considered as hours 
worked depends on the circumstances and should 
be determined on a case by case basis. 

(b) Home to Work. An employee who travels 
from home before the regular workday and re- 
turns home at the end of the workday is engaged 
in ordinary home to work travel which is a nor- 
mal incident of employment. This is true 
whether the employee works at a fixed location 
or at different job sites. Normal travel from 
home to work is not work time. 

(c) Home To Work On Special One- Day As- 
signments in /Vnother City. When an employee 
who regularly works at a fixed location in one 
city is given a special one-day assignment in an- 
other city, such travel cannot be regarded as 
home-to-work travel. 

(d) Travel That Is All In The Day's Work. 
Time spent by an employee in travel as part of 
the employee's principal activity, such as travel 
from job site to job site during the workday, 
must be counted as hours worked. Wfien an 
employee is required to report at the employer's 



NORTH CAROLINA REGISTER 



564 



PROPOSED RULES 



premises, or at a meeting place, to receive in- 
structions or to perform other work there, the 
tra\el time from this designated place to the work 
place is part of the day's work and must be 
counted as hours worked. 

(e) Travel Away From Home Community. 
Tra\el that keeps an employee away from home 
ONcmiglit is tra\el away from home. Travel time 
away from home community is work time when 
it cuts across the employee's regular scheduled 
workdays. The time is not only hours worked 
on regular working days during normal working 
hours but also during the corresponding hours 
on nonworking days. Therefore, if an employee 
regularly works from 8:30 a.m. to 5:30 p.m., from 
Monda\- tlirough Friday, the travel time during 
these hours is work time on Saturday and Sunday 
as well as on the other days. Regular meal pe- 
riod time is not counted. That time spent in 
tra\el away from home outside of regular work- 
ing hours (8:30 - 5:30) as a passenger on airplane, 
train, bus, or automobile is not considered as 
work time. 

(f) Admimstrative, Executive, and Professional 
employees may be granted hour for hour time 
off as a result of tra\el in accordance with the 
agency leave policy. 

Slamtofj Authority G.S. 126-4. 

.1940 RKCORnKF.KPlNG 

Records of hours worked and wages paid are 
required to be kept for each employee subject to 
tliis policy. Records must be preserved for at 
least three years. Fach agency head is responsi- 
ble for making a\ailable the following informa- 
tion for review by Federal and State auditors and 
the Office of State Personnel: 

(1) Name: 

(2) Home address: 

(3) Date of birth, if under 19; 

(4) Sex and position classitication m which 
employed (sex may be indicated by use of 
prefixes Mr., .Mrs. or .Ms.); 

(5) Time and day of week the workweek or 
work period begins; 

(6) Total wages paid each pay period: 

(7) Date of payment and pay period covered; 

(8) Basis on which wages are paid [such four 
dollars ($4.00) hr.. tliree hundred dollars 
(S300) wk., or nine hundred fiftv dollars 
($950) a month]; 

(9) Regular hourly rate of pay for any work 
ueek or work period in which o\ertime is 
worked: 

(10) .Amount and nature of each payment ex- 
cluded from resnjlar rate; 



(11) Hours worked each workday and total 
hours worked each workweek or work pe- 
riod; 

(12) Total daily or weekly straight-time earn- 
ings or wages; 

(13) Total overtime earnings for the workweek; 

(14) Total additions to or deductions from 
wages paid each pay period plus the dates, 
amounts and nature of the items which 
make up the total additions and deductions; 

(15) Compensatory time accrued, used or paid. 

Statutory Authority G.S. 126-4. 

.1941 E\F.CLTI\F,: ADMIMSTR\TI\ E .\ND 
PROFESSION.\F EMPLOYEES 

The exempt or non-exempt status of any par- 
ticular employee must be determined on the basis 
of whether duties, responsibilities and salary meet 
the requirements for exemption. Tbie employee's 
title or classification is of no significance in de- 
termmmg whether the criteria for exemption un- 
der the executive, professional or administrative 
exemptions are met. It shall be the responsibility 
of the agency head to decide whether the ex- 
emption is applicable to particular employees. 
llie Office of State Personnel shall review, for 
each state agency and uni\crsity, a list of the ex- 
empt and non-e.xempt employees by name and 
classification title and make recommendations to 
the agency head for any changes to that list. 
However, the agency head has the fmal decision 
as to the exempt or non-exempt status of any 
employee or position in that particular agency. 

Statutory .-iuthority G.S. 126-4. 

.1942 EXECLTINE EMPLOYEES 

Following is an outline of the terms and condi- 
tions to be followed in determining those em- 
ployees exempt from this Section under the 
Executive exemption. 

( 1 ) An employee is exempt as an executi\e, if 
these conditions are met: 

(a) 1 lis primar\' duty is managing or directing 
operation of an agency, institution or 
school, or a customarily recognized de- 
partment or subdivision thereof; 

(b) He customarily and regularly directs the 
work of two or more full-time employees, 
if equal to 80 hours total: 

(c) He has authority to hire and fire, or sug- 
gestions on hiring, firing, promotions, or 
changes of employees status carry partic- 
ular weiglit; 

(d) He customarily and regularly exercises 
discretionary powers in carrying out the 
position responsibilities; 



565 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



(c) I Ic docs not devote more than 20 percent 
of the hours worked during a workweek 
in non-exempt work; 
(f) I le is paid on salary or fee basis of at least 
one hundred fifty-five dollars ($155) a 
week, exclusive of board, lodging, or other 
purposes. 

Exception: An executive employee who 
is paid at least two hundred fifty dollars 
($250) a week thirteen thousand dollars 
($13,000) annual rate on a salary or fee 
basis and who meets the first two condi- 
tions above is exempt. The percentage 
tests set out in Subsection (10) for non- 
exempt work do not apply to such em- 
ployees. 
All these conditions must be met in order for the 
exemption to be granted; if any one of the con- 
ditions is not met, the exemption must fail. 

(2) Primary Duty and Management - The exe- 
cutive exemption requires that the primary 
duty of an employee or position exempted 
as executi\e must be management. 

(3) Managerial duties take into consideration 
the frequency of the employee's use of dis- 
cretion and relative freedom from super- 
vision. This rule docs not define 
management. However, these functions 
come within the scope of management: In- 
terviewing, selecting and training of em- 
ployees'; setting and adjusting rates of pay 
and hours of work; directing work; main- 
taining production records for use in super- 
vision or control; appraising productivity 
and efficiency for recommending pro- 
motions or other changes in status; handling 
complaints, disciplining employees; planning 
work; determining work techniques, con- 
trolling the flow and distribution of materials 
and supplies, and providing for the safety of 
workers and property. 

(4) If the executive employee is in charge of a 
division, rather than of the entire depart- 
ment, the division must be formally estab- 
Ushed, not simply a group of employees 
assigned to a job. Usually, the division has 
a specific title, like Shipping Division or 
Accounting Division. 

(5) Supervision of Other Workers - An execu- 
tive employee must direct the work of two 
or more employees, that is, the employee 
must direct at least two full-time workers or 
the equivalent. For example, the test would 
be met if the emplo>ee directs: 

(a) one full-time and two part-time workers, 
if total is 80 hours, one of whom works 
mornings and the other afternoons; or, 



(b) four part-time workers, two of whom 
work mornings and the others afternoons, 
if the total hours worked for all four po- 
sitions is 80 hours or more. The workers 
who are supervised must be employed in 
the department or sub-division that the 
executive employee is managing. 

(6) An executive employee must be directly 
concerned either with the hiring or the firing 
and other change of status of the employees 
under the employee's supervision, whether 
by direct action or by recommendation to 
those delegated to hire and tire. 

(7) Use of Discretion - The policy requires that 
an executive employee customarily and reg- 
ularly exercises discretionary powers. 
"Customarily and regularly" is interpreted 
to mean a frequency that must be greater 
than occasional, but may be less than con- 
stant. The requirement is met by the em- 
ployee who normally and recurrently is 
called upon to use and does use discretion 
in the day-to-day performance of duties. 
Of course, an employee whose work is so 
routine that there is no discretion does not 
qualify for the executive exemption. 

(8) Salary Requirement - Salaries paid monthly 
or semi-monthly which are equivalent to 
one hundred fifty-five dollars ($155) a week 
three hundred ten dollars |($310) bi-weekly, 
three hundred thirty-five dollars and eiglit- 
y-three cents ($335.83) semi-monthly, or six 
hundred seventy-one dollars and sixty-seven 
cents ($671.67) monthly] are within the re- 
quirement. However, the shortest period of 
payment which will meet the requirement 
of pay on a salary basis is a week. Em- 
ployees paid by the hour are not included in 
this exemption regardless of the fact that the 
amount paid them weekly far exceeds one 
hundred fifty-five dollars ($155); they are not 
paid on a salary basis. But a guarantee of 
one hundred fifty-five dollars ($155) a week 
in any week in which any work is performed 
will meet the salary requirement even 
though additional wages arc paid on an 
hourly basis. 

(9) Salary Basis - Executive employees have to 
be paid on a salary basis to be exempt. The 
meaning of salary basis is most important. 
Salary basis means that an employee regu- 
larly receives each pay period on a weekly, 
or less frequent basis, a predetermined 
amount constituting all or part of the com- 
pensation and the amount is not subject to 
reduction because of variations in the num- 
ber of hours worked in the workweek or in 



NORTH CAROLINA REGISTER 



566 



PROPOSED RULES 



the quality or quantity ot the work per- 
formed. 

(10) Non-exempt Work/ Percentage Rule - If 
an employee with executive duties works for 
more than 20 percent of the workweek on 
non-exempt work the exemption fails. 

(11) Work which tends to destroy the executive 
exemption is work which does not contrib- 
ute to the executive's supervisory status, re- 
gardless of whether the same type of work 
is done by employees under their super- 
\ision or by other employees of the em- 
ployer. I'or example, in an operation not 
large enough to employ a timekeeper or in 
which the timekeeping function has been 
decentralized, the supervisor of each depart- 
ment can keep basic time records of the 
supervisor's subordinates and count the 
work as exempt. However, the preparation 
of the payroll by a supervisor - even of the 
employees under the employee's supervision 
- would be non-exempt work. The reason 
for this is that the preparation of a payroll 
does not aid in the supervision of emplosees 
or the management of the department. 

(12) I he mere fact that certain work many be 
too difficult to be performed by anyone in 
the department other than the employee 
who heads the department docs not prevent 
work from being non-exempt. Regardless 
of importance or degree of dilTiculty, if work 
is not part of the supervisory duties and does 
not directly affect the continued operation 
of the department it must be counted as 
non-exempt work. 

(13) An executive employee may perform 
non-exempt duties for the purpose of in- 
structing new employees without losing the 
exemption. Such work is considered a part 
of the supervisory duties and is exempt. But 
if the employee performs non-exempt duties 
to fill in time between supervisory duties or 
to assist other employees, such work is 
non-exempt and subject to the percentage 
Umitation set out above. 

(14) Emergencies - If an executive employee 
does non-exempt work dunng an emer- 
gency, this particular work does not have to 
be counted in computing the percent limit 
on non-exempt work. 

(a) I'xample 1: The occasional performance 
of repair u ork in case of a breakdown of 
machinery can be considered exempt 
work if the breakdown is one that the 
employer cannot reasonably anticipate. 

(b) Example 2: Reliesing .^ubordinates during 
rest or vacation periods cannot be con- 



sidered exempt emergency work since the 
need for replacements can be anticipated. 
( 1 5) Exceptions - The 20 percent limit on 
non-exempt work does not apply to execu- 
tive employees in sole charge of an inde- 
pendent establishment or a physically 
separated branch establishment. The term 
independent establishment has to be given 
fuU weight. The establishment must have a 
fixed location and must be geographically 
separated from other company property. 
The management of operations within one 
or among several buildings located on a sin- 
gle or adjoining tracts of company property 
does not qualify for the executive ex- 
emption. In the case of a branch, there 
must be a true and complete physical sepa- 
ration from the main office. 

Statutory Authority G.S. 126-4. 

.1943 ADMINISTRATIVE EMI'LOYEES 

(a) An employee is exempt as an administrative 
employee, if all of these conditions are met: 

(1) primary duty consists of performing office 
or non-manual work directly related to 
management policies or general business 
operations of agency, institution, school, 
or any department or sub-division thereof; 

(2) customarily and regularly exercises dis- 
cretion and independent judgement, as 
distinguished from using skills or follow- 
ing procedures; 

(3) regularly and directly assists an agency 
head, or an executi\e, administrati\'e, or 
professional employee, or pertbrms under 
only general supervision work along spe- 
cialized and technical lines requiring spe- 
cial training, expenence or knowledge, or 
in the performance of functions in ad- 
ministration of a school system or educa- 
tional institution in work directly related 
to academic instruction or training; 

(4) does not devote more than 20 percent of 
the hours worked during a workweek in 
non-exempt work; 

(5) is paid on salary or fee basis of at least one 
hundred fift\-five dollars ($155) a week, 
exclusive of board, lodging, or other pur- 
poses. 

Exception: An administrati\e employee who 
is paid on salary or fee basis of at least two 
hundred fifty dollars ($250) a week [thirteen 
thousand ($13,000) dollars annual rate] and 
who meets first two conditions abo\e is ex- 
empt. The percentage tests for non-exempt 
work do not apply. 



56: 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



(h) Types of Administrative Fmployees - There 
arc three types ot employees who are exempt as 
administrative employees if they meet all the 
other conditions. These employees are: 

(1) I'xecutive and administrative assistants. 
This first type is the assistant to a propri- 
etor or to an executive or administrative 
employee. Typical of this group are exe- 
cutive assistant to the president, confi- 
dcnti;d assistant, executive secretary, 
assistant to the general manager, and ad- 
ministrative assistant. These assistants are 
usually found in large establishments 
where the official assisted has so many 
duties that some must be delegated. 

(2) Staff employees. I-mployces in the second 
group are staff rather than line employees 
(functional, rather than departmental 
heads). They include employees who act 
as advisory specialists to the management. 
Examples are tax experts, insurance ex- 
perts, research experts, wage rate analysts, 
investment consultants, foreign exchange 
consultants, and statisticians. Also in- 
cluded are those in charge of a so-caUed 
functional department that may frequently 
be a one-person department. Examples 
are purchasing agents, buyers, safety di- 
rectors, and personnel directors. 

(3) Special assignment emploNces. The tliird 
group consists of persons who perfonn 
special assignments. /Vmong them are 
persons who work away from their em- 
ployer s place of business. Examples are 
traveling auditors, buyers, and traveling 
inventory employees. The group also in- 
cludes employees whose special assign- 
ments are performed entirely or partly 
inside their employer's place of business. 

(c) E.mployccs possibly qualifying for the ad- 
ministrative employee exemption ha\e extremely 
diverse functions and a wide variety of titles. A 
title alone is of little or no assistance in deter- 
mining an employee's exempt or non-exempt 
status. The status of the employee should be 
determined on the basis of whether duties, re- 
sponsibilities and salary meet all the requirements 
of the rules. 

(d) IMmar\' Duty - To qualify for exemption 
as an administrative employee, an employee must 
have as a primary duty office or non-manual 
work directly related to management policies or 
general business operations of the employer or 
the employer's programs. This condition is met 
only only by employees who participate in the 
formulation of management policies or in the 
operation of the business as a whole - it is also 
met by employees whose work atfects policy or 



who execute policy and by employees whose 
work affects business operations to a substantial 
degree even though their assignments are only for 
a particular segment of the business. 

(e) Discretion and Independent Judgement - 
These tcnns are interpreted to mean the author- 
ity to make an independent choice, free from 
immediate supervision, in significant matters. 
They should not be confused with the use of skill 
in applying techniques, procedures, or specific 
standards. 

(1) Example 1: Inspectors nonnally do spe- 
ciah/ed work along standardized hnes in- 
volving well established techniques and 
procedures that may have been catalogued 
and described in manuals or other sources, 
riiese inspectors use skill rather than dis- 
cretion and judgement. 

(2) Example 2: A shipping clerk is normally 
permitted to decide the method of packing 
and the mode of shipment of small orders, 
and a bookkeeper may usually decide 
whether the employee will post first to 
one ledger rather than another. These 
decisions do not deal with significant 
matters. 

(f| Decisions by an employee need not have a 
fmalitN that goes with unlimited authority and a 
complete absence of re\iew. It is acceptable for 
the decisions to consist of recommendations for 
action or to be subject to review. 

(g) Salary Requirement - The one hundred fif- 
ty-five dollars ($155) weekly salary requirement 
for administrative exemption is met if the em- 
ployee is compensated bi-weekly on a salary basis 
of three hundred ten dollars ($310), semi- 
monthly on a salary basis of three hundred thir- 
ty-five dollars and eighty-three cents ($335.83) 
or monthly on a salary basis of six hundred sev- 
enty-one dollars and sixty-seven cents ($671.67). 

(h) Non-exempt Work/ Percentage Rule - If an 
employee with some administrative duties works 
for more than 20 percent of the workweek on 
non-exempt work, the exemption fails. 

Siuiuloty Authority G.S. 126-4. 

.1944 PROI KSSIONAL EMPr.OYEKS 

(a) /Vn employee is exempt as a professional 
employee, if these conditions are met: 

(1) The primar)' duty must consist of per- 
formance of work requiring knowledge 
of an advanced type in the field of science 
or learning, customarily acquired by pro- 
longed specialized instructions and study, 
as distinguished from general academic 
education (such as doctors, lawyers, engi- 
neers, chemists, nurses, etc.); or work that 



NORTH CAROLINA REGISTER 



568 



PROPOSED RULES 



is creative and original (such artists, writ- 
ers, architects, designers, musicians, ac- 
tors, certain radio and television 
announcers, etc.); or acti\'ities of impart- 
mg knowledge such as teaching, tutoring, 
instructing, lecturing, etc.; 
(2) work requires the consistent exercise of 
discretion and judgement in its perform- 
ance; 
(i) does not devote more than 20 percent of 
hours worked during workweek in per- 
formance of duties which are not an es- 
seiuial part of and necessarily incident to 
\sork described in (a)(1) of this Rule; 
(4) IS paid on salar>' or fee basis of not less 
than one hundred se\cnty dollars ($170) 
a week. (This salary' or fee requirement 
does not apply to an employee who is the 
holder of \'aLid license or certificate per- 
mitting practice of law or medicine, or in 
the case of interns or resident physicians, 
or employees employed and engaged as 
teachers in activities referred to in (a)(1) 
in this Rule). 
Exception: An employee employed in a bona 
fide professional capacity under above terms who 
is paid salary or fee of at least two hundred fifty 
dolhirs ($250) a week thirteen thousand dollars 
($13,000) annual rate is exempt. The percentage 
test for non-exempt work does not apply to such 
an employee. 

(b) Learned I'rofessions - The learned pro- 
fessions are described as those requiring know- 
ledge of an ad\ anced type m a field of science or 
learning customarily acquired by a prolonged 
course of specialized intellectual instruction and 
study. These points should be noted: 

( 1 ) The knowledge has to be a type that must 
be attained at least at or above the colle- 
giate level. 

(2) The word customarily implies that in the 
vast majority of cases, specit^ic academic 
training is necessary for entrance into the 
profession. However, the exemption is 
a\ailable to employees who have gained 
their knowledge by home study and ex- 
perience such as lawyers uho have not 
gone to law school. 

(3) The exemption does not apply to entire 
occupational groups regardless of the spe- 
cific duties of the particular individual. 
Tor example, exemption of accountants 
must be determined on the basis of the 
individual accountant's duties and other 
qualifications. 

(c) Artistic Professions - The requirements for 
the artistic type of professional work are that the 
work has to be original and creati\e in character 



in a recognized artistic field and the result of 
which must depend primanly on the invention, 
imagination, or talent of the emplosce. This ex- 
emption includes such fields as music, writing, 
the theater, and the plastic and graphic arts. In 
addition, the requirements of (a)(2)- through (4j 
must also be met. 

Statutory Authority G.S. 126-4. 

.1945 SPECIAI. PROVISIONS 

(a) Child Labor: 

(1) Si.xteen years is the minimum age for most 
employment covered by the FLSA. This 
includes employment in agriculture during 
school hours or in any occupation in ag- 
riculture declared hazardous by the Secre- 
tary of Labor. 

(2) Lighteen years is the minimum age for 
employment in a nonagricultural occupa- 
tion declared hazardous by the Secretary- 
of Labor. Of particular interest to all 
agencies are Hazardous Orders of the 
Secretary, U.S. Department of Labor, 
prohibiting the employment of minors 
between 16 and 18 years of age such as 
motor vehicle drivers and helpers, opera- 
tors of elevators and in occupations in- 
volving the operation of certain power 
dn\en woodworking and bakery ma- 
chines. 

(3) The state's present policy on employment 
under age 18 wiQ continue to be: "The 
minimum at which minors may be em- 
ployed is 18 years of age. Exceptions are 
pro\ided under the law if the employing 
department procures an Employment 
Certificate from the County Social Ser- 
vices Department." (Ref G.S. 110, Arti- 
cle 1). A further determination is stiU 
necessary under Federal standards as to 
the suitability of the work being required 
of the minor. The Office of State Per- 
sonnel wiU make available upon request 
an interpretive bulletin explaining the 
child labor standards of employment. 

(4) .Minors will be paid the same rate of pay 
as other employees doing similar type 
work, including o\ertime premium pay 
for hours worked in excess of 40 per week. 
The only exception is for agricultural 
workers (see (b)(1) and (2) of this Rule). 

(b) Agricultural Workers: 

(1) The FLSA exempts agricultural employees 
from overtime compensation: ho\se\er, it 
is state policy that due to the highly vari- 
able nature of work of these employees 
during seasonal periods, the hours worked 



569 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



may be averaged over a 12-nionth period, 
but shall not exceed 2080 hours. Upon 
leaving state service, an agricultural em- 
ployee shall be paid for any accumulated 
overtime bakmce remaining in the time 
records. 
(2) Agricultural workers are defined as work- 
ers who cultivate the soil or grow or har- 
vest crops, engage in dairying, or who 
raise livestock, bees or poultry, or perform 
closely related research. 

(c) Student Workers: 

( 1 ) The employment of students by the insti- 
tutions in which they are enrolled is de- 
signed primarily to constitute one type of 
student financiid aid. Such employment 
usually is characterized by flexible accom- 
modation of the student's primary in- 
volvement in educational pursuits. Thus, 
in tcnns of hours worked, scheduling of 
work and required skill and productivity, 
such student workers are materially dis- 
tinguishable from regular career employ- 
ees. 

(2) Any person who during any period of en- 
rollment as a student in a public educa- 
tional institution concurrently is 
employed by that mstitutions shall be 
considered an employee subject to the 
State I'ersonnel Act and witliin the me- 
aning of that Act only if the student-em- 
ployee is employed by the institution on 
a full-time pennanent basis (as defined by 
rules of the State Personnel ("ommission) 
in a pennanent position established and 
governed pursuant to requirements of the 
State Personnel Commission. 

(d) In- Resident I'mploymcnt: 

(1) This includes, but is not limited to, em- 
ployees such as Cottage Parents and 
Donnitor> Directors who reside at, or 
spend a substantial amount of time on the 
employer's premises, who are usually on 
duty or subject to call at all times except 
when the facility is closed. It is necessary 
that these employees be required to work 
irregular schedules on a five, six, or sev- 
en-day workweek. Where this type of 
employment arrangements are necessary, 
the hours of work and overtime proce- 
dures must be established so as to ac- 
commodate work requirements. 

(2) While it will be difficult to determine the 
exact number of hours worked by such 
employees, it is permissible, under ruling 
of the U.S. Department of Labor, Wage 
and Hour Division, to arrive at an agree- 
ment with the employee as to what con- 



stitutes the nonnal number of hours 
worked during a given workweek, taking 
into consideration the time that the em- 
ployee engages in private pursuits such as 
eating, sleeping, entertaining and the time 
they are able to be away from the facility 
for personal reasons. The following basis 
of pay may be adopted for employees in 
such categories; 

(A) Salary - The annual salary and monthly 
salary rates of an employee are established 
under current personnel policy for each 
position to which the appointment is 
made. With the employee's agreement, 
this salary is to represent the employee's 
straight-time pay for the agreed upon 
normal number hours on duty per week. 
The hourly rate of pay is to be determined 
by dividing the stated annual salary by 52 
to obtain the weekly salary and dividing 
this amount by 40 to obtain the hourly 
rate. 

(B) Overtime Compensation - Under this 
plan it is anticipated that weekly schedules 
will lluctuate and workweek schedules wiU 
be provided on a 40-45, 55, etc. basis. 
The cmplo\ee is to receive straight-time 
pay for the established workweek with the 
proviso that where the agreed upon wor- 
kweek exceeds 40 hours and additional 
amount equal to one-half of the hourly 
rate times the number of hours in excess 
of 40 will be added to the base pay. When 
it is necessary to work in excess of the 
agreed upon wc^rkweck hours, the em- 
ployees will be paid time and one-half the 
hourly rate for all hours worked in excess 
of the nonnal workweek. 

(e) Registered Nurses: 

(1) When It is neccssaP)' for an employee in a 
professional nursing class to work more 
than a regularly scheduled 40 hour wor- 
kweek the excess hours shall be subject to 
hours of work and o\'ertime compen- 
sation. When possible, the compensation 
should be in the form of time off. When 
the person in the position norm;Uly has 
24 hours responsibility, (as in the case of 
some supervisors and most directors), ov- 
ertime compensation provisions shall not 
be apphcablc. 

(2) The overtime premium pa\' v\ill be based 
on the employee's regular hourl>- rate of 
pay, except in cases where an employee 
may be assigned duties at a lower classi- 
fication level; in such cases the base rate 
of pay may not exceed the maximum rate 
of the lower level assignment. 



NORTH CAROLINA REGISTER 



570 



PROPOSED RULES 



(f) I aw 1 ntbacincnt Acti\itics: 

( 1 ) The tcmi l;i\v enforcement activities refers 
to an\ employee who is a uniformed or 
plainclothed member of a body of otTiccrs 
and subordinates who are empowered by 
statute or local ordinance to enforce laws 
designed to maintain public peace and 
order and to protect both lite and property 
from accidental or willful injury, and to 
pre\cnt and detect crimes, or who has the 
power of ;uTest, or who is presently un- 
dergoing or has undergone or will undergo 
on-the-job training and or a course of in- 
struction and study which t\pically m- 
cludes physical training, self-defense, 
firearm proficiency, cnminal and chil law 
principles, iinxstigative and law enforce- 
ment technic]ues. community relations, 
medical aid and ethnics. 

(2 1 I^mployees who meet these tests are con- 
sidered to be engaged in law enforcement 
activities regardless of their rank or of 
their status as "trainee", "probationary", 
or "pennancnt" employee, and their as- 
signment to duties incidental to the per- 
formance of their law enforcement 
acti\ities. 

(3) The term "employees in law enforcement 
acti\ities" also includes "security person- 
nel in correctional institutions". This in- 
cludes an\" go\emment tacility maintamed 
as part of a penal system for the incarcer- 
ation or detention of persons suspected 
or con\icted of having breached the peace 
or committed some other crime. Such 
facilities include penitentiaries, prisons, 
prison farms, county, city and sillage jails, 
precinct house lockups and reformatories. 
Emplo\ees of correctional institutions 
who qualify are those who have responsi- 
bility for controlling and maintaining cus- 
tody' of inmates and of safeguarding them 
from other inmates or for supervising such 
functions regardless of whether their du- 
ties are performed inside the correctional 
in.stitution or outside the institution (as in 
the case of road gangs). These employees 
arc considered to be engaged in law en- 
forcement acti\ities regardless of their 
rank. Law enforcement emplosees may 
include, for example, fish and game ward- 
ens or criminal in\estigati\'c agents as- 
signed to the attorney general's stall or 
any other law enforcement agency con- 
cerned with keeping public peace and or- 
der and protectmg life and property. 
(.\) Not included in the term "employee in 
law enforcement acti\ities" are the so- 



called "cnilian" employees of law en- 
forcement agencies or correctional 
institutions who engage in such support 
activities as those performed by dis- 
patcher, radio (operators, apparatus and 
equipment maintenance and repair work- 
ers, janitors, clerks and stenographers. 
Nor does the term include correctional 
program assistants, directors or supervi- 
sors or employees in correctional insti- 
tutions who engage in building repair and 
maintenance, culinar\' services, teaching 
or in psychological, medical and par- 
amedical services. This is so even though 
such employees may, when assigned to 
correctional institutions, come Into regu- 
lar contact with the inmates in the per- 
formance of their duties, or may be 
required by statute or rule to be certified 
by the Criminal Justice draining and 
Standards Council. 

(4) Because of the varied nature of law en- 
forcement activities throughout the state, 
it may not be possible for all law enforce- 
ment classifications to be considered un- 
der the same plans for o\ertime. Under 
the Wage and Hour Law two options are 
p>ermissible. 

(.A) For schedules requiring a 40-hour 
workweek, the policies on hours of work 
and o\ertime pay for a 40-hour workweek 
will apply. 

(B) For schedules requiring more than 40 
hours in a workweek the following is per- 
missible. The "work period" will consist 
of 28 consecutive days. In the workweek 
period of 28 consecuti\e days the em- 
ployee shall receive, for tours of duty 
which In the aggregate exceed 171 hours, 
compensation at a rate of one and one- 
half times the regular hourly rate at which 
employed. (The regular hourly rate is the 
rate computed on a 40-hour basis and 
published in the Salary Plan by the Office 
of State Personnel, plus shift premium 
pay, if any. J 

(5) The exempt or non-exempt status of law' 
enforcement personnel will be determined 
under the terms of the exemption for Ex- 
ecutive, Professional and .Administrative 
Employees as set out previously In this 
Section. 

(g) Employees engaged in law enforcement ac- 
ti\'ities may also engage In some non-law en- 
forcement work as an incident to or in 
conjunction with their law enforcement acti\ ities. 
The performance of such work will not cause the 
employee to lose law enforcement status unless 



5^1 



yORTH CAROLI.\A REGISTER 



PROPOSED RULES 



such work exceeds 20 percent of tlie total hours 
worked b\ that employee during the workweek 
or the applicable work period. A person who 
spends more than 20 percent of his working time 
in non-law enforcement acti\'ities shall not be 
considered as being engaged m law enforcement 
acti\itics for co\eragc under this portion of this 
Section. 

Staiutoiy Auihoriiy G.S. 126-4. 

.1946 0\ KRI IMt/rOMPKNS.\TORV TIME 
Oil OI'TION FOR LAW 
F.NKORCKMKM: FIRK PROTPXIION 
AND KMFRCFNC^ RKSI'ONSF 
PKRSONNEL 
The following pro\isions are applicable only to 
agencies who employ persons in nonexempt law 
enforcement fire protection emergency response 
positions. Such agencies may, by letter to the 
State Personnel Director, choose to utiliy.e the 
following o\'ertime compensation provisitins in 
lieu of the customary' overtime compensation 
proMsions elsewhere in tliis Section: 
(1) I'nder these provisions, nonexempt persons 
in law enforcement positions who work 
more than 171 hours (or 212 hours for no- 
nexempt persons in tire protection or emer- 



gency response positions) 



in 



2X 



consecutive day work period may be gi\cn 
compensatory time off in heu of cash pay- 
ment for those overtime hours worked. 

(2) Compensatory' time off earned must be 
used no later than ISO days from the date 
the compensatory time off was earned. 

(3) Compensatory time off earned, but not 
used within ISO days from its being earned 
must be paid for in cash in the first pay pe- 
riod following the expiration of the 180 days. 

(4) Overtime earned under these provisions 
must be compensated at the rate of one and 
one-half time the regular hourly rate or one 
and one-half hours of compensatory time 
off for each hour of overtime earned. 

(5) If an employee under these provisions has 
a positive balance of earned compensatory 
time off and is promoted to an exempt po- 
sition, the accumulation of earned compen- 
satory' time off must be paid in cash before 
the employee goes into the exempt position. 

(6) Employees cannot accumulate more than 
320 overtime hours (480 straight-tim.c 
hours). /\ny overtime earned in exi^ess of 
320 hours must be paid in cash as earned. 

Statutoty Aulhority G.S. J 26-4. 

.1947 lOl R OF ni rV AM) 

COMI'KNSABLE IIOL RS OF WORK 



The term "tour of duty" is a unique concept 
applicable only to employees in law enforcement 
and fire protection activities. Ihis term means 
the period of time dunng which an employee is 
considered to be on duty for purposes of deter- 
mining compensable hours. It may be a sched- 
uled or unscheduled pcnod. Scheduled periods 
also include time spent in work outside the 
"shift" which the public agency employer assigns 
to the employee. I nscheduled periods include 
time spent in court by officers, time spent han- 
dling emergency situations and time spent work- 
ing after a shift to complete an assignment. Such 
time must be included in the compensable tour 
of duty even though the specific work performed 
may not have been assigned in advance. The 
tour of duty does not include time spent working 
on an occasional or sporadic and part-time basis 
in a different capacity from the regular work. 
Neither does it include time spent substituting for 
other employees by mutual agreement. The tour 
of duty also does not include time spent in vol- 
unteer law enforcement and fire protection activ- 
ities perfonned for a different jurisdiction. 

Statutory Authority G.S. 126-4. 

.1948 OCCASIONAI. OR SPORADIC 

EMIM ()>MFNT IN A DIFFERENT 
CAPAriT\ 

(a) Where employees, solely at their option, 
work occasionaUy or sporadically on a part-time 
basis for the same pubhc agency in a different 
capacity from their regular employment, the 
hours worked in the different jobs shall not be 
combined for the purpose of determining over- 
time compensation under this Section. 

(b) "Occasional or Sporadic" - The term 
"occasional or sporadic" means infrequent, ir- 
regular or occurring in scattered instances. There 
may be an occasional need for additional re- 
sources in the deliver,' of certain types of services 
which is at times best met by the part-time em- 
ployment of an indi\'idual who is already cm- 
ployed by the state. VVTiere employees freely and 
solely at their own option enter into such activ- 
ity, the total hours worked will not be combined 
for purposes of determining any overtime com- 
pensation due on the regular, primary job. 
However, in order to prevent overtime abuse, 
such hours worked are to be excluded from 
computing overtime compensation due only 
where the occasional or sporadic assignments are 
not within the same general occupational cate- 
gory as the employee's regular work. 

(c) In order for hours of such work not to be 
combined with hours worked on the primary, 
regular job, the employee's decision to work in a 



NO RTH CAROLINA R EG IS TER 



572 



PROPOSED RULES 



ditTcrcnt capacity must he made freely and with- 
out coercion. The employee s decision to per- 
fonn such work will be considered to have been 
made at his sole option when it has been made 
without fear of reprisal or promise of reward. 

(d) Typically, recreation and park facihties, 
uni\ersity athletic facilities or other public events 
may need to utilize employees in occasional or 
sporadic work. l:mplo\mcnt in such acti\ity 
may be considered occasional or sporadic for re- 
gular state employees e\cn when the need for 
such wxirk can be anticipated because it recurs 
seasonally (the State Fair, for example). 

(e) In order to be "occasional or sporadic" it 
is essential that the character of the acti\ity be 
intermittent and irregular, rather than continuous 
or regular. 

(f) In order for employment in these occasional 
or sporadic activities not be considered subject 
to the o\'ertime pro\isions of this Section, the 
regular state employment of the indi\idual must 
also be in a different capacity: that is, it must not 
fall within the same general occupational cate- 
gory . 

Siaiuiorj Auihoriiy G.S. 126-4. 

.1949 SI BSTITLTION 

(a) Two persons emplo\ed by the same agenc\^ 
ma\ agree, solely at their option and with the 
appro\ al of the agency, to substitute for one an- 
other during scheduled work hours in perfonn- 
ance of work in the same capacity. The hours 
worked in a substituting capacity shall be ex- 
cluded from the calculation of hours for which 
the substituting employee is entitled to overtune 
compensation under this policy. This provision 
will apply only if the employees' decisions to 
substitute for one another arc made freely and 
without coercion, direct or impUed. An agency 
may suggest that an emplo)"ee substitute or 
"trade time" with another employee working in 
the same capacity during regularly scheduled 
hours, but each cmplo\"ce must be free to refuse 
to perform such work without sanction, and 
\\ithout being required to explain or justify that 
decision. Such a decision will be considered \o- 
luntap,' when it has been made without fear of 
reprisal or promise of reward and for the em- 
ployee's con\'enience, rather than the con\en- 
ience of the agency's operations. 

(b) .\gencies whose employees engage in sub- 
stitute work under this provision are not required 
to keep a record of the hours of the substitute 
work. However, it is strongly recommended that 
records of this type of arrangement be kept as a 
matter of good personnel practice. There is also 
no limit on the period of time during which 



hours worked may be traded or paid back among 
employees. Any agreement between employees 
to substitute for one another at their own option 
must be appro\'ed by the agency; this approval 
must be prior to the substitution and the agency 
must know what work is being done, who is do- 
ing the work, and when and where the work is 
being done. The type of approval (formal, in- 
formal, oral, wntten or otherwise) is left to the 
decision of the agency. 

Statutory Authority G.S. 126-4. 

.1950 VOLLNTEERS 

(a) Volunteer work does not create an em- 
ployer-employee relationship so as require cov- 
erage under wage and hour and overtime 
compensation standards. This rule is intended 
to proN'ide guidance to agencies in determining 
whether scr\ice performed is voluntarv', and thus 
exempt from treatment under this Section. 

(b) .A \olunteer is one who performs hours of 
sen.'ice for a state agency for civic, charitable or 
humanitarian reasons without promise or expec- 
tation of compensation for services provided. 
Service pro\ided by a \olunteer is not subject to 
the provisions of this Section, However, an in- 
dividual shall not be considered a volunteer if the 
person is otherwise employed by the same agency 
to perform the same type of ser\ices as those for 
which the person proposes to \"olunteer. Vol- 
unteers may receive expenses, reasonable bene- 
fits, a nominal fee or anN" combination thereof 
without losing their status as volunteers. 

Statutory- Authority G.S. 126-4. 

SECTION .2000 - I NKMPLOY.MENT 
INSLR.\NCE 

.2001 CO\ER.\CE 

I-tfecti\'e January 1, 1978, the North Carohna 
General Assembly pro\ided unemployment in- 
surance coverage for all temporarx" and perma- 
nent state emplovees except those exempted by 
G.S. 96-8(6)i. 

Statutory Authority G.S. 96-S(6)j: 96-S(6)i. 

.2002 POLICY 

The bmployment Security Commission (ESC) 
has sole jurisdiction over decisions concerning 
unemployment insurance (LT) claims ajudication 
and benefit rights, and has adopted regulations in 
conjunction with Employment Security Law for 
claims processing and benefits administration. 
It is the policy of the state to comply with Em- 
ployment Security law and ESC regulations in a 
cooperati\'e and expeditious manner. The pur- 



573 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



pose of this policy is to assure employees the 
benefits provided by law while protecting the 
state from undue benefit charges. 

Statutory Atuhority G.S. 126-4(10). 



.2003 ADMINISTRATION 

(a) The Office of State Personnel shall design. 
ctTect, and maintain a ccntrahzed unemployment 
insurance cost management program, which shall 
have as its goal effective claims administration 
and the control of benefit costs. This goal shall 
be accomplished by improved cormnunications 
and agency training on unemployment insurance 
issues and procedure, conscientious monitoring 
and administration of individual claims and ben- 
efit charges, examination of payment options, the 
creation and maintenance of a comprehensive 
unemployment insurance database, and related 
efforts. When it is determined advantageous and 
cost etTecti\'e, the Office of State Persormel may 
engage the services of a qualilied service firm to 
pro\ide claims administration support. 

(b) The Office of State Personnel shall desig- 
nate an UI Coordinator, whose responsibility it 
shall be to coordinate the overall program. The 
duties of the IJI Coordinator shall include: 

(1) DcNclopment and distribution of a UI 
Cost Management Procedures Manual. 

(2) Contract oversight to assure the delivery 
of services, where a third party firm is en- 
gaged to establish and carry out a central- 
ized claims administration system. 

(3) Action as an intermediary between state 
agencies and the claims services firm, if 
such a firm is retained. 

(4) Development and delivery of agency 
training programs on LT administration. 

(5) Service as a technical resource to the 
agencies on UI matters. 

(6) y\ssimilation of a comprehensive UI data 
base, which accurately records claims ac- 
tivity and benefit charges to state ac- 
counts, and provides the basis for sound 
repoils that can be used to guide man- 
agement decisions on the UI Program. 

(7) Initiation of studies, recommendations, 
and reports relevant to UI cost manage- 
ment. 

(8) Recommendations concerning the design 
and cost effectiveness of the centralized 
UT Program. 

(9) Coordination with the Office of State 
Budget where there is a need to examine 
costing methods or fmancial aspects. 

(10) The monitonng of legislative actions 
concerning UI law and benefits, and ser- 
vice as spokesperson before legislative 



committees when it is within program in- 
terests. 
(11) Coordination with the Employment Se- 
curity Commission on relevant questions 
and issues. 

Statutory Authority G.S. 126-4(10). 

.2004 AGENCY RESPONSIBILITIES 

Each agency and institution shall designate an 
employee, preferably with working knowledge of 
the unemployment insurance function, to coor- 
dinate the flow of necessary information between 
the agency, the Office of State Personnel and any 
claims administrator retained by the Office of 
State Personnel. The specific responsibilities of 
the Agency UI Coordinator are as foUows: 

(1) Participate in the UI training opportunities 
offered by the Office of State Persoruiel or 
its designated claims administration firm. 
Develop a working knowledge of the proce- 
dures outlined in the Procedures Manual for 
the centralized cost control program. 

(2) Ensure that agency hiring authorities 
maintain adequate documentation to pro- 
vide and support the separation information 
required by the ESC on individual claims. 

(3) Pro\ide detailed and timely wage and se- 
paration information, as nccessar>' for the 
ESC to properly adjudicate an individual's 
claim for benefits, and to protect the 
state's interests against undue benefits. 

(4) Work with the Office of State personnel 
or its designated claims administrator to 
coordinate attendance of necessary wit- 
nesses and to assure the availability of 
documentation for UI hearings. 

(5) Communicate to the Office of State Per- 
sonnel or its designee any agency issue or 
action which may affect an individual's 
benefit entitlement. 

(6) Act as agency liaison for obtaining other 
information which may become relevant 
and valuable to the interests of the central 
UI cost management program. 

Statutor}- Authority G.S. 1 26-4 ( 10). 

SLBCHAPIER IE - EMPLOYEE BENEFITS 

SECTION .1000 - LEAVE: GENERAL 
PROVISIONS 

.1005 LEAVE: ADVERSE WEATHER 
CONDITIONS 

(a) The geographical location and diversity of 
state services and programs make it impossible 
to apply a uniform statewide policy regarding 
how operations will be affected in times of ad- 



NORTH CAROLINA REGISTER 



574 



PROPOSED RULES 



\ crsc weather conditions. I hL'roloro. At» follovs' 
H+^ pnliev vrttt iipply ' r vli e ii dL ' cii . ion ' i mui ' t ^ 
iiunjt ' k+ L ' lther continiiL ' t*f tL ' niptjiarily i . Ui . pond 
■. LT i ue - j *. a riji ' Ult »f udseri ' L' ' ■ s-futhe'r condi 
tion '. . 

(4-^ Within Walce County, -fh^ Governor m- 
coopeuition ' i vith t-h*» OITilo »f Statij P»f- 
r . onnL'l vi-i+1- detomiint' afni unnounce' ' ■ ' ■ h e n 
udinini '' trati' ^ L > otTict ';. m Wake County 
"■v+H- W eKv . L ' d tk+t» k^' adst. ' r ;.e ' ■ vouther. i* 
H- reeognij'L ' d Vhrtf >' Onw oi-i e ration - ' ' muc . t 
Lt'iitinu e h+ prosido in.T' ^ ieo^ . ' ■ vithout re- 
gard te- ' ■ ' ■ L - athL ' r tondiiion ;. . I here'tore ' , 
ajoncy lioadi . wtH predetorniino aft4 d e f . ig 
Ht4^ (4*e mandatory operations which vrttt 
r e inLiin opL'n. 
(-34 .Area '. Out '. id i j Wdkc County. Agency 
h e ad -' . t>F tlu'ir dei . iLinaled reprei ' enluti' ^ en. 
¥r*tt detennin e (4+e operation - ^ ^4w4- "A-tH- w- 
main open *h4 M- ' ■ vhiil extent otiier ep- 
eratioH ' , ' may l*e teniporanly clor ^ ed m- 
area ;, out '. id e W«W County. 
administrati\e otTiccs of .State Go\emmcnt 



The 

ui Wake Counts" must he open dunng nomial 
business hours to ser\'e local LroNcmments and 
the citi/ens of North Carolina and to pro\'ide 

rhesc 



whereby employees may- uill be given an oppor- 
tunity to make up time not worked (cither by 
suspension of ser\'ices or voluntary action by 
employee) rather than charging it to leave. 

There are very few opportunities for such time 
to be made up without the employee working 
more than 40 hours during a work week. Sinco 
the opportunhy te- mak e «f» the time k^ i* a 
bonL ' ht fof y** employee, ri- v4ii l*e penniL . L . iblo, 
therefore. f»f such maJveup lime h^ occur h* e*t- 
ee^ »f forty hours ift a work week- ' ■ sithout tkte 
time being subject te- overtime compensation, 
pro>ided ?4+irf- t4*e emplo; i eo ba* r e quested the 
opportunity t© maJ(e ttj* k*t4 time subject te th» 
condition that overtime compensation wili net 
be made. Since hours worked in excess of 40 
during a work week would constitute o\ertime 
under tederal res^ulations. it will be necessary' for 
make-up time for emplo\ees subject to overtime 
to be limited to the \^^ork week in which the time 
i^ lost or m a week when the emplo\ee has not 
worked a full work schedule due to such absences 
as holidaxs. \acation, sick lease. ci\il lease, etc. 
lime must be made up ssithin 12 months from 
the occurrence of the absence. If it is not made 
up ssithin 12 months, sacation lease must be 
charged. 

(d) .Special Prosision. Wlien catastrophic, 
life-threatening ss eat her conditions occur, as cre- 
ated bs humcanes, tornadoes, or floods, and it 



support ser\ ices to business and industr 

o Hi CCS ss ill remain c^pen. es en m adserse s^^eather. 

and n ij; the resptmsibilits of emi^losees to make 

a \:ood faith effort Ui come to ssork duriniz these 

times. h_ IS recognized that some other oper- becomes necessars tor authonties to order esac- 

uation from the place of emplosment, the fol- 
lovsing prosisions ssiU presail: 

( I ) hmplosecs ssho are required to esacuate 
ssill not be required to make up time that 
b lost frcmi ssork dunng the penod otTi- 
ciallv declared hazardous to life and safetv. 



itions m and out of Wake Counts must continue 
to pros idc services ss iihout regard to ss eat her 
conditions- Ihereftire. aiiencs' heads shall pre- 
dclennine and dcsiLinate the mandator\' oper- 
ations s\ hich sv ill remain open, .\gencs' heads. 
or their desi'jnated represenlatises . mas' deter- 
mine to sshat extent ans' other operations mav 
be suspended or temporanls closed. 

(b) When it has been detemiined that sersices 
ssiU be suspended, time lost svill be charged to 
sacation. U offic e s remain open, I'mployees, not 
ssorking in mandators (speratitms. ssho anticipate 
problems in transportation shiiuld be pennitted 
and encouraged to adjust th e ir work schedule 
' ■ ' ■ hen possible Bt- te as'ail themseh'es of vacation 
leas'e pnsileges sshen encountering difficults' in 
reporting for ssork or sshen leasing earls'. L'm- 
plosees svho are on prearranged s'acation lease 
or on sick leave svill charge leas'e to the appro- 
priate account ssith no prosision for makeup 
time. In either of the abose, emplosees mas' be 
allosved to make up linie in accordance ssith this 
Rule. 

(c) When employees are assay from svork be- 
cause of adserse sseather conditions, where op- 
erational needs alloss', management niay must 
make even' reasonable elToil to an'onae schedules 



Implovees required to remain at ssork 
mav be relies'ed administratiselv tor a pe- 
nod oi time necessars' to assure the safetv 
of their famils . 
(2) h'mplovees required Ui ss'ork m such 
cmergcncv situations ssill be paid m ac- 
cordance sv'ith the state s polics on Hours 
of Work and Osertime Compensation. 
I'sePv effort should be made to compen- 
sate osertime bv additional pasment 
rather than compensators' time. 

Statutory Authority G.S. J26-4i lOj. 

SI lUIIAPTKR 1.1 -EMIM.OM.K RFLAHONS 

SKCTION .0800 - GO\ KKNOK'S AWARD FOR 
K.XCtLl.KNCE 

.0X01 in RF'OSF. 

The State of North Carolina has long been 
noted for loyal, elTicient and dedicated employees 



:>/:> 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



who prcnidc valuable scniccs in all areas ot state 
government. I'hc Governor's Award for Txcel- 
lence was created to acknowledge and express 
appreciation for outstanding achievements made 
by the employees of the state. This award is the 
highest honor that a state employee may receu'e 
for dedicated service to state government and the 
people of North Carolina. 

Slatuloty Auihnrily G.S. l26-4( 13). 

.0802 .\\V.\KnS COMMITTEE 

The Awards program is administered by the 
State Personnel Commission, with one member 
of the commission serving as chairperson for the 
Awards Committee. The Governor will make 
other appointments to the committee to assist 
the commission in the selection of the final 
awards. The duties of the committee are as fol- 
lows; 

(1) Fach year the committee shaU recommend 
to the Governor the week to be pro- 
claimed as "North Carolina State Em- 
ploNces .Appreciation Week." 

(2) The committee shaJl make annual se- 
lection of those state employees to receive 
the Go\emor's .Award for Excellence. 

Statuioiy Authority G. S. l26-4{ 13). 

.0803 NOMINAIIONS 

(a) Nomination may be made for meritorious 
or distinguished accomplishments made by any 
pemianent state emplo\ce at any level of em- 
ployment with consideration gi\en to the relati\'e 
opportunities for accomplishment afforded by 
the individual's position. A prescribed nomi- 
nation form will be furnished to each department 
and uni\ersity to be used to submit their nomi- 
nations for the Governor's Awards. A deceased 
employee, a retired employee, or an employee on 
leave-without-pay may also be nominated. Em- 
ploy ees may nominate peers and or managers 
and vice versa. Employees who were nominated, 
but who did not receive the Governor's Award 
of Excellence, may be nominated agam in a suc- 
ceeding year. 

(b) This program is for all permanent employ- 
ees including the managerial and administrative 
levels such as: 

(1) Deputy and Assistant Department Head; 

(2) Di\ision Directors: 

(3) Deputy and Assistant Directors of major 
divisions in the larger departments; 

(4) Key assistants to the Department Head 
or Uni\ersity Chancellor who exert major 
policy influence. 



However, it does not include elected officials and 
University Chancellors. It does not include those 
employees who work in the public school system 
or community colleges. 

(c) The accomphshments need not fall entirely 
within the scope of normal duties, but shall be in 
the nature of a major contribution reflecting cre- 
dit on the person and state service. The merito- 
rious senice or accompHshment must be so 
singularly outstanding that special recognition is 
justified. 

Statutory .Authority G.S. 126-4(13). 

.0804 AW ARDS CATEGORIES 

Awards may be made in the following catego- 
ries: 

(1) Devotion to Duty. Ihrough unselfish de- 
votion to duty, far and above normal re- 
quirements, employee has contributed 
significantly to the advancement of state 
ser\'ice to the citizens of the state. 

(2) InnoN'ations. Through fruitful study and 
in\estigation employee has initiated and 
successfuUy established new and outstanding 
methods, practices, plans or designs having 
fundamental values. (Such as pioneering or 
research and development work in adminis- 
tration, engineering, productivity, agricul- 
ture, medicine, natural resources, the social 
sciences, etc.) 

(3) I'ublic Service. Employee has made out- 
standmg contributions to the public service. 

(4) Safety Heroism. Employee has demon- 
strated outstanding judgement, courage, 
self-possession or ability in an emergency, 
meritorious action to prevent injury, loss of 
fife or to pre\ent damage to or loss of prop- 
erty. 

(5) Human Relations. Employee has made 
outstanding contributions to the field of hu- 
man relations, employee-management re- 
lations, or any of the allied fields. 

(6) Other Achievements. Employee has made 
other significant achievements for services 
which deserve recognition. 

Statutory Authority G.S. / 26-4(13). 

.0805 DEPARTMENT/LMVERSITY 
ADMINISTRATION 

Each department or unis'ersity shall adopt poli- 
cies and procedures monitored by the State Per- 
sonnel Commission that will: 
(1) Establish a program to recognize annually 
within the department or university out- 
standing and meritorious achievements 
within the six categories set out under the 



NORTH CAROLIN.A REGISTER 



576 



PROPOSED RULES 



Awards section. 1 he program may provide 
for one or more awards depending on the 
organizational structure and size of divisions 
or major programs within the department 
or university. 
(2) Proside for an Awards Committee to he 
responsible for the processing of awards; 
suitable ceremonies for presentation of 
awards; and, to promote participation in the 
program by all eligible employees. 

Siaiuton Authority G.S. I26-4[13). 

.0806 M MBKR OF NOMIN.\TIO\S 

The number of nominations that may be sub- 
mitted from each department or uni\ersity for the 
CjONcmor's Awards for I'xcellencc is based on 
the total number of permanent employees in the 
classes that are eligible as of the end of the last 
calendar \ ear. 

Statutory Authority G.S. 126-4(13). 

.0807 CRITKKIA FOR SF.LEC HON 

(a) The criteria for the Go\ eniors .Award are 
outstanding scr\'ice, accomplishment, and con- 
tnbution to the state. The pcifonnance upon 
which the selection is based must be clearly 
abo\e and beyond that which would be expected 
from dedicated employees who are fully and 
competently discharging all of the duties and sa- 
tisfying all of the requirements of their job. 

(b) Outstanding performance is performance 
which surpasses the range of normally expected 
pertbrmance. The possibilities for \'ar\ing levels 
of performance abo\e nonnal expectations are 
infinite. .\n emplo\ee miglit be superior as to 
quality of work and be satisfactory in all other 
respects; or be iuperior on quality and quantity 
and be satisfactory in meeting other require- 
ments. When the employee becomes supenor in 
all factors, perfonnance is in the upper range of 
supenor and may be considered in the area of 
"outstandmg" performance; for example, a le\el 
of peribnnance in all aspects of work which ex- 
ceeds nonnal requirements to such an extent that 
each is considered worthy of special commenda- 
tion. 

(c) Establishing the upper limit of peribrmance 
beyond which awardable perfonnance begins can 
seldom be done with a precision w hich will sub- 
stitute tor human judgement in each specific in- 
stance. It can be said in general that the 
minimum required le\el should not be so high 
as to be unattainable by employees who are 
generally recognized as peribrming in an out- 
standing manner, nor so low that awards lose 
their siizniticance bv beinsi casilv obtainable. 



(d) A special act or service is a singular con- 
tnbution w hich may be relatively easy to identify 
and relate to generally known human experience 
and standards of public service. This might be 
an act of heroism. A definition of a standard 
would not be necessary for such cases, and it 
should not be difTicult for a person having 
knowledge of the accomplishment to prepare a 
recommendation for consideration. 

(e) When the accomplishment is closely con- 
nected with the performance of normal duties, it 
will be necessary to consider how it was beyond 
the scope of normal activity. 

(f) It is e\ident that administration of a pro- 
gram of awards for superior performance cannot 
be reduced to an absolute science. Adherence to 
certain principles will tend toward more success- 
ful results, but precise methods for applying them 
to specific situations are seldom possible. A large 
measure of good and consistent judgement is es- 
sential. 

Statutory Authority G.S. 126-4(13). 

.0808 TYPE OF .\\V ARD 

The award will be a mounted plaque inscribed 
with an appropriate message of recognition and 
appreciation signed by the Go\emor and dis- 
pla\ing the Seal of The State of North Carolina. 
Tach will receive an appropriately designed piece 
of personal jewelry which can be worn as a re- 
cipient of the Go\emor's Award for Fxcellence. 

Statutory .luthority G.S. 126-4( 13). 

.0809 PROCFOLRFS 

(a) Nominations will be ranked independently 
b\' each member of the committee. Selection of 
the award recipients will then be made by ma- 
jority vote of the committee after complete eval- 
uation of all eligible candidates. 

(b) The committee will recommend an appro- 
priate ceremony in keeping with the significance 
of the awards. Awards will be presented annually 
by the Governor at a ceremony during the week 
proclaimed by the Governor as "North Carolina 
State Employees Appreciation Week". 

Statutory Authority G.S. 126-4(13). 

SLBCIIAPTER IK - PERSONNFL TRAINING 

SFCTION .0600 - WORK 
PLANNING/PERFORM ANCE REVIEW 

.060.^ POLICY (REPEALED) 
.0604 GOALS (REPEALED) 
.0605 { OMPONFN IS OF THE SYSTEM 
(REPEALED) 



577 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



.0606 !)(){ IMKM AIION (KKPKAI.ED) 
.0607 RKI.ATIONSIIll' OK WORK PLANMNG 

AM) PKRI OKMANCE KEMKW 

(KH'KAI KD) 
.0608 PROGRAM ACCOINTABILITY: 

MOM rORING: ASSKSSMKNT: AND 

IMPROMMKM (RKPKALKD) 
.0609 RKSPONSIBIl.n IKS OK THE OKKTCE OF 

STATK PKRSONNKI (RKPEALED) 
.0610 RKSPONSIBILITIKS OK OKPARTMENIS: 

AGKNCIKS: INSTITl TIONS (RKPEALED) 
.061 1 RKSPONSIHIUTIES OK MANAGERS 

AND SI:PKR\ (SOR (RKI'EALED) 

Statuton Authoriiy G.S. 126-4. 

.0612 PI RPOSE 

The purpose of Work Planning and I'crform- 
ance Rc\ie\v is to assist management in making 
sound decisions for granting salary' increases so 
as to provide a fair and equitable system for re- 
cognizing and rewarding deserving employees. 
This polic\' recognizes that personnel manage- 
ment decisions must take into consideration 
other \'ariab!es along with performance appraisal. 
The purj^ose of W.P.P.R. is to assist manage- 
ment in achieving consistent and equitable treat- 
ment among employees. An equitable plan for 
evaluating employee performance is also needed 
for the following: 

(1) a basis for initiating various personnel ac- 
tions such as training, development, pro- 
motion, reassignments, separation, 
demotions, reduction-in-force; 

(2) to pro\ide employees with a clear under- 
standing of what performance is acceptable 
and unacceptable; 

(3) to improve supervisory and employee 
communications: 

(4) to pro\'ide a mechanism to determine areas 
needing improvement so that in the posi- 
tion, the emf:>lo)ce may continue to grow in 
their position. 

Slatuloty Authoriiy G.S. J 26-4(8). 

.061.3 RKSPONSIHIKI I \ OK DKPARIMENTS: 
AGENCIES AND INSTEKLTIONS 

Consistent with this policy and Chapter 
126-4(8), esePi' state agency, department or insti- 
tution shall establish a Work Planning and Per- 
formance Review Program wliich includes these 
basic compi)nents: 
(1) Identification of PrimaP) Duties: Fach su- 
per\isor is responsible for determining what 
each employee does in their position. This 
consists of determining the Primary Duties 
and Critical Tasks and Behaviors for a posi- 
tion. This requires a mutual understanding 



of: the Primary Duties and Critical Tasks 
and Behaviors; the relative importance of 
the employee's duties in relation to each 
other; the relationship of those duties to the 
goals of the work unit and the agency. 

(2) Identifying Performance Expectations: 
Performance Expectations are the measures 
or factors wliich will be used to appraise an 
employee's performance. ITie immediate 
supervisor is responsible for determining 
performance expectations and should always 
involve the employee in the process. Per- 
formance expectations shall be developed or 
updated at least once a year. This requires 
a mutual understanding of what represents 
".Meets I-xpectations" and what represents 
"Does Not Meet I:xpectations". 

(3) Coaching: Coaching is a responsibrhty of 
the super\isor in directing an employee's 
performance while work is in progress. 
Coaching duties include: monitoring or 
keeping up-to-date on an employee's per- 
formance through observation, discussions, 
or reports; reinforcing good performance by 
giving the employee immediate, positive 
feedback; correcting poor performance 
tlirough immediate feedback and helping the 
employee improve; reaching agreement with 
an employee on modified pertbrmance ex- 
pectations if changed conditions so require. 

(4) Performance Appraisal. At the end of the 
pert'oiTnance appraisal cycle, every employee 
with his/her supervisor shall; review the 
employee's performance expectations and 
actual performance; discuss whether the 
employee Exceeded, Met, or Did Not Meet 
Expectations; review any materials the em- 
ployee may have regarding each expectation; 
rate each expectation as to whether the em- 
ployee Exceeded, Met or Did Not .Meet 
Expectations; determine the overall per- 
formance as to whether the employee Ex- 
ceeded, Met, or Did Not Meet Expectations. 

(5j Performance Increase Determinations. 
Based on the overall performance appraisal 
rating, the supervisor will determine the ap- 
propriate salary increase. Performance in- 
creases shall be considered on the following 
basis: employees whose performance does 
not meet expectations shaO not receive a sa- 
lary increase; a salary increase will be al- 
lowed in graduated amounts for degrees at 
or above a meets expectations. Increases 
must be within the provisions of the ap- 
proved standards and availability of funds. 
Any proposed personnel action shall be 
consistent with a current (within 12 months) 
appraisal of the employee's performance. 



NORTH CAROLINA REGISTER 



578 



PROPOSED RULES 



(6) Developmental. The supervisor determines 
whether the employee needs additional 
knowledge, skills, ability, or education and 
experience in order to meet expectations in 
the future. F\er>' supervisor is responsible 
for determinmg what emplo\ees weaknesses 
attributed to not meeting expectations. 
Once that determination has been made, 
then both the super\'isor and the employee 
should mutually agree upon an action plan 
that will assist the employee s impro\'ed 
perfonnance during the next work cycle. 
The supervisor shall identify good perform- 
ance and which perfonnance needs im- 
provement; agree on a plan for 
impro\'ement. 

Statutory Authority G.S. 126-4(8). 

.0614 DOn \1K\T.\T10N 

l'ffecti\e supervision requu"es documentation of 
significant perfonnance agreements between em- 
ployee and supervisor at all stages of the Work 
Planning and Perfonnance Review process. 

(1) Departments, agencies, and uni\ersities 
shall require supervisors to document, m 
writing, primary duties and responsibilities, 
agreed upon performance expectations, 
work plans, performance evaluations, per- 
formance increase deteiTninations, and de- 
velopmental plans and agreements. 

(2) An official Performance .Appraisal Form, 
wliich includes an overall performance ap- 
praisal rating, shall be maintained for e\cr>' 
employee. This Perfonnance .Appraisal 
I'orm shall be appro\ed by the Office of 
State Personnel. At the beginning of the 
perfonnance appraisal cycle, the supervisor 
shall record in the Performance Appraisal 
Form the employee's performance expecta- 
tions. /\t the end of the pcri'onnance ap- 
praisal cycle, the supervisor shall record in 
the Peri'ormance Appraisal Form for each 
Expectation, whether the employee Ex- 
ceeded, Met, or Did Not Meet Expectations. 
The performance Appraisal Form shall be 
signed by the employee, the supervisor, and 
the supervisor's manager and treated confi- 
dentially. Performance Appraisal Form 
e\aluation must be completed at least an- 
nually on all employees. 

(.^) An_\ proposed personnel action shall be 
consistent with a cunent (within 12 months) 
appraisal of the emplo> ee's performance. 

(4) Performance Appraisal fonns shall be kept 
for three \ears and disposed of according to 
G.S. 121-5 (b), (c). 



Statutory Authority G.S. 126-4(8); G.S. 
I2l-5(b). (c). 

.0615 PROGRAM ACCOUNTABILITY: 
MONITORING: ASSKSSMENT 
AND IMPROVEMENT 

A monitoring program for W.P.P.R. shall be 
provided to insure that department and agency 
programs are in compliance with policy pro- 
visions; to identify needs for program revisions 
and improvements; and to develop plans to bring 
about miprovements. 

(1) Responsibilities of the Office of State Per- 
sonnel; 

(a) de\elop and interpret policy and proce- 
dures; 

(b) review and approve agency policies, pro- 
cedures, and forms; 

(c) assist agencies in developing guidelines for 
making assessments and developing plans 
for impro\ement; 

(d) conduct annual assessments to determine 
both comphance and effectiveness of the 
Work Planning and Performance Review 
Program; 

(e) provide training and assistance to agency 
W.P.P.R. coordinators; 

(f) provide annual Summary reports to the 
State Persomiel Commission. 

(2) Responsibilities of Departments, Agencies, 
and Institutions: 

(a) develop, implement, and administer pohcy 
and procedures consistent with state pol- 
icy; 

(b) pro\ide on a continuing basis for the 
training of supervisors and managers in 
the supervisory skills and the procedures 
necessary for effective Work Plarming and 
Performance Review; 

(c) assist the Office of State Persormel in 
conducting an annual audit; submit to the 
State Personnel Commission through the 
Office of State Personnel an annual status 
report including actions taken, assessment 
of effectiveness and improvements 
planned. 

Statutory Authority G.S. 126-4(8). 

TITLE 26 OFFICE OF ADMESISTR.ATrV E 
HEARINGS 

1\ otice is hereby given in accordance with G.S. 
I SOB- 1 2 that the Office of Administrati\-e Hear- 
ins;s intends to adopt and amend ru/e(sl cited as 
26 .\CAC I .0001; 26 NCAC 2A .0205, .02/0, 
.02 JJ. .0212, .0302, .0403, .0405; 26 NCAC 2B 



579 



NORTH CAROLINA RECjLSTER 



PROPOSED RULES 



.0104, .0203; 26 SC.IC 3 
.0022. .0026 and .0030. 



.0001, .0002, .0014, 



1 he proposed effeclhe date of ihis action is 
.lanuaij I, /9S9. ' 

1 he public hearing will be conducted at 9:00 
a.m. on October 17, I9SS at Hearing Room I . Lee 
House. 422 Sorth Blount Street, Raleigh, Sorth 
Carolina. 



Co 



otnment Procedures: Comments may be sub- 
mitted in person or in writing at the public hearing 
or in writing prior to October 17. J9SS. to Robert 
.A. Melott. Chief Administrative Law Judge, P. 
O. Drawer 11666. Raleigh. SC 2'604. 

C\\ M'lKR 1 - GKNFRA[. 

.0001 COST FOR COPIKS 

(a) Copies in looseleaf form of an)' public do- 
cuments as filed in the Office of Administrati\e 
Hearings, are available at a cost of two dollars 
and fift\- cents ($2.50) for up to ten pages and 
fil'teen cents ($0.15) per page for each page in 
excess of ten. 

(b) Certified copies of any public document 
filed in the Office of Administrative Hearings are 
available at a cost of one dollar ($1.00) per cer- 
tification in addition to the cop\ing cost set out 
in I'aragraph (a) of this Rule. 

(c) iranscnpts are a\'ailable of contested case 
heanniis. Reference should be made to Rule 26 
NC.\C 3 .01122 tor procedures tor requesting and 
costs o{_ transcripts. 

Statutory .luihoritv G.S. l50B-62{b): 
/50B-63ifl. 

CIl.VPIKR 2 - Rl 1 FS DIMSION 

SI BCM AI'FFR 2\ - NC AC 

SECTION .0200 - (JFNFRAF FIFING 
RFQLIRFMFNTS 

.0205 SI HMISSION FOR FIFING FORM 

(a) The completed .Submission for Filing form 
certifies that the rule being tiled has been offi- 
cially adopted, amended, or repealed, identifieo 
the ft4r* l*y citation 1ft tlw North Carolina Ad- 
mini '. trati' . !. ' Code. ew4 indicat e' : , under v , h^it fertJ- 
thority tl+e ft4t* h*? been adoi'ited. .Ml 
Submission for lihug forms shall be signed bv 
the agenc\ head (^r a subi^rdinale olficer or em- 
plo\ee designated bv the agency head in wnting 
under Ci.S, i4,M]-in(a). 

(b) More than one rule may be listed on a 
single form if the same procedure (adoption, 



amendment, or repeal) is being done on several 
rules in the same chapter fof A* fKimo reason and 
the filing dates and effecti\'e dates are the same. 

Statutory .Authority G.S. I50B-60. 

.0210 ACCEPTANCE OF RFLFS FIFED 

(a) When an action is accepted for filing by the 
Office of .Administrative Hearings, the agency 
will be sent a completed copy of the Submission 
for Filing form which indicates that the action is 
acceptable for filing. 

(b) When the rule has been prmted by the Of- 
fice of Administrative Hearings, the agency head 
or a subordinate officer or emplovee designated 
bv the agency head in wnting under G.S. 
1430- biM) will receive one copy of the docu- 
ment at no charge. 

Statutory- Authority G.S. 150B-60: I50B-6I; 
I50B-63. 

.021 I AGENCY FINAF COPY 

Fach department, agency, board and commis- 
sion shall be responsible for proofmg the final 
computer copv of its rules as provided in G.S. 
150B-61(c). 

Statutory Authority G.S. I50B-60; l50B-6I(c). 

.0212 MAIFING FIST 

OxAH will distribute information of a general 
nature concerning rule filings and related matters 
to the .A PA Coordinator(s) designated in writing 
by the agency head. It is the responsibility of the 
agencv to keep such designations current with 

oah! 

Statutory Authority G.S. 150B-60. 
SECTION .0.^00 - TEMPORARY RLLEMAKING 

.0302 SLBMISSION FOR FIFING FORM 

Each temporarv' rule that is filed shall be ac- 
companied by a Submission for Filing form; 
pro\ided that, more than one temporary rule 
may be included on the same form if they are 
filed t**f t+h» iiam ij r t» ar . on, to be effective on the 
same date and for the same period of time. 

Statutory .Authority G.S. 150B-60. 

SECTION .0400 - PIHSICAF FORMAT 

.0403 INTRODL C rOR^ STATEMENT 

(d) WTien part of a rule is to be amended, the 
agenc\ shall cite the smallest portion of the rule 
which IS changed. This is so the agency does not 
have to retype the entire rule when only a portion 



NOR TH CA ROLINA R EG IS TER 



5S0 



PROPOSED RULES 



is being changed. \\'hi»n a fttte h» umfntlt ' d hf th« 
adJitimi b<^ d e l e tion t*f a piirauruph, the intro 
duct()p » ■i taloment i i houid fi*«4 as followo: "Rul e 
f-foW oiUilmii) ha* bi'un iimondod by tfee 
uddititHi dL ' U'tion ef Paragraph (*t) a* follows:" In 
this case, only the paragraph which is being re- 
written needs to be typed. Other paragraphs will 
be renumbered accordingly. 

Note: I "or example, when a rule is amended by 
the addition or deletion of a paragraph, the in- 
troductorN" statement should read as foUows: 
"Rule (lull citati(m) has been amended by the 
(addition) (deletion) of Paragraph (c) as 
follows:". 

Slatutoiy Authority G.S. I50B-60. 

.0405 lllSrORVNOTE 

(c) Authorities cited in history notes shall be 
cited according to the most current edition of the 
rules of citation contained in "A Uniform System 
of Citation", a copy of which is available in the 
OtTice of Administrative Hearings, except that the 
General Statutes of North Carolina shall be 
identified by the dooignutod designation "G.S." 
rather than "N.C. Gen. Stat.". 

Statutoij Authority G.S. I50B-60. 



SI BCII.VPTKR 2B - NOKlll 
REGISTER 



CAROLINA 



SECTION .0100 - PLBLICATION 

.0104 AVAII ABILITY OF THE 

NOR III CAROLINA REGISTER 

Ihe North Carolina Register is pubhshed twice 
monthly by the OtTice of Administrati\e Hear- 
ings and is available at a cost of nine'ty frve ti»4- 
lafs ($95.00) one hundred and fi\e dollars 
($105.00) per year subscription. Requests for 
subscriptions should be directed to the OfTice of 
y\dministrati\e Hearings, P.O. Drawer 11666, 
Raleigli, N. C. 27604, (919) 733-2678. 

Statutory Authority G.S. I50B-63. 

SEC HON .0200 - CENER.M. FILING 
REQLIREMENIS 

.0203 ACCEP lANCE FOR PLBLICATION 

When a submission is accepted for publication 
by the Office of Administrative Heanngs, the 
agency will be gi' i cn a sent a completed copy of 
the Submission for Notice form which indicates 
that the submission is acceptable for publication. 

Statutoty Authority G.S. I50B-60. 



CHAPTER 3 - HEARINGS DIVISION 

.0001 GENERAL 

Governed by the principles of fairness, uni- 
formity, and punctuality, the following general 
rules apply: 

(1) The Rules of Civil Procedure as contained 
in G.S. lA-1, aB4 the General Rules of 
Practice for the Superior and District Courts 
as authorized by G.S. 7A-34 and found in 
the Rules Volume of the North Carolina 
General Statutes and Canons 2^ 2 and 3 of 
the Code of Judicial Conduct adopted m 
accordance with G.S. 7A-10.1 shall apply in 
contested cases in the Office of Administra- 
tive Hearings (OAH) unless another specific 
statute or rule of the Office of Administra- 
tive Hearings provides otherwise. 

(2) The Office of Administrative Hearings may 
supply, at the cost of reproduction, forms 
for use in contested cases. These forms will 
conform to the format of the Administrative 
Office of the Courts' Judicial Department 
Fonns Manual. 

(3) Every document filed with the Office of 
Administrative Hearings shall be signed by 
the attorney who prepared the document, if 
it was prepared by an attorney, and shall 
contain his name, address, telephone num- 
ber, and North Carolina State Bar number. 

(4) Except as otherwise provided by statutes 
or by rules promulgated under G.S. 
150B-38(h), the rules contained in this 
Chapter shall govern the conduct of con- 
tested case hearings under G.S. 1508-40 
when an Administrati\e Law Judge has been 
assigned to preside in the contested case. 

Statutory Authority G.S. 7A-750; I50B-II; 
l50B-40(c). 

.0002 DEFINITIONS AND CONSTRLCTION 

(a) The definitions contained in G.S. 150B-2 
are incorporated herein by reference. In addition, 
the following definitions apply: 

(1) "Chief Administrative Law Judge" means 
the Diroctor ^ Ae Offioo »f Adminiatra 
tive I loaringc i person appointed according 
to G.S. Chaptor 7A .Vrtiolo 6© 7A-751. 

(2) "EUe or Filing" means to place the paper 
or item to be filed into the care and cus- 
tody of the Chief Hearings Clerk of the 
Office of Administrative Hearings, and 
acceptance thereof by him, except that the 
administrative law judge may permit the 
papers to be filed with him in which event 
the administrati\ e law judge shall note 
thereon the filing date. /Vll documents 



5Sl 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



filed with the Office of Administrative 
Hearings, except exhibits, shall be in letter 
size 8 1/2" by 11". 
(3) "Ser\'ice or Ser\'e" means personal delivery 
or, unless otherwise provided by law or 
rule, deliver)' by first class United States 
Postal Sen ice mail or a licensed overnight 
express mail service, postage prepaid and 
addressed to the party at his or her last 
known address. A Certificate of Service 
by the person making the service shall be 
appended to every document requiring 
ser\ ice under these Rules. Service by mail 
or licensed overnight express mail is com- 
plete upon placing the item to be served, 
enclosed in a wrapper addressed to the 
person to be served, in an official deposi- 
tory of the United States Postal Ser\ice 
or upon delivery, postage prepaid and 
wrapped in a wrapper addressed to the 
person to be scr\ed, to an agent of the 
o\emight express mail service, 
(b) The rules of statutor>' construction con- 
tained in Chapter 12 of the General Statutes shall 
be applied in the construction of these Rules. 

Slatulon^ Authority G.S. 7A-751: I50B-II. 

.0014 SANCTIONS 

(a) If a party fails to appear at a hearing or fails 
to comply with an interlocutory order of an ad- 
ministrative law judge, the administrative law 
judge may; 

(1) Find that the allegations of or the issues 
set out in the notice of hearing or other 
pleading may be taken as true or deemed 
proved without further evidence; 

(2) Dismiss or grant the motion or petition; 

(3) Suppress a claim or defense; or 

(4) Exclude evidence. 

(b) In the event that any party or attorney at 
law or other representative of a party engages in 
behavior that obstructs the orderly conduct of 
proceedings or would constitute contempt if 
done in the General Court of Justice, the ad- 
ministrati\e law judge presiding may apply te- Ae 
enter a show cause order returnable in Superior 
Court for contempt proceedings in accordance 
with G.S. 150B-33(b)(8). 



Statutory A uthority 
I50B-33(bj(4),(8J. 



G.S. l50B-25(a); 



.0022 OFFICIAL RECORD 

The official record of a contested case is avail- 
able for public inspection upon reasonable re- 
quest. An administrative law judge may, upon 



good cause shown and consistent with law, order 
part or all of an official record sealed. 

(1) The official record shall be prepared in ac- 
cordance with G.S. 150B-37(a). 

(2) Contested case hearings are recorded either 
by a four-track recording system or a pro- 
fessional court reporter using stenomask or 
stenotype. All costs incurred when using a 
professional court reporter shall be divided 
pro-rata among the partv(ies) requesting a 
transcript. A 24 hour cancellation notice is 
required in all cases. The party(ies) respon- 
sible for the cancellation shall be liable for 
any cancellation fees. 

(3) (3} Transcripts of proceedings during which 
oral evidence is presented will be made only 
upon request of a party. The requesting 
party shall pay the cost of such transcript 
or copy thereof that the party orders and this 
cost shall include the cost of an original for 
the Office of Administrative Hearings. Cost 
shall be determined under supervision of the 
Chief Administrative Law Judge who, in 
cases deemed appropriate by him, may re- 
quire an advance security deposit to cover 
the prospective cost. The security deposit 
shall be applied to the actual cost and any 
excess shall be returned to the party which 
submitted it. 

Statutory Authority G.S. J50B-37. 

.0026 ADMINISTRATIVE LAW JLDGE'S 
RECOMMENDED DECISION 

(a) I-'xcept as provided in 26 NCAC 3 .0030, an 
administrative law judge shall issue a recom- 
mended decision or order in a contested case 
within 45 days after the later of the date the ad- 
ministrative law judge receives all proposed fmd- 
ings of fact and written arguments submitted by 
the parties and the date the contested case hear- 
ing ends. The administrative law judge shall 
serve a copy of the decision on each party. Ser- 
vice shall be in the manner specified in 26 NCAC 
3 .0009(b). When an administrative law judge 
issues a recommended decision, the Office of 
Administrative Hearings shall promptly forward 
the official record in the case to the agency mak- 
ing the fmal decision. 

(b) A recommended decision shaU be based 
exclusively on; 

(1) competent evidence and arguments pre- 
sented during the hearing and made a part 
of the official record; 

(2) stipulations of fact; 

(3) matters officially noticed; 



NORTH CAROLINA REGISTER 



582 



PROPOSED RULES 



(4) proposed findings of fact and written ar- 
guments submitted by the parties under 
G.S. 150B-34(b); and 

(5) other items in the official record that are 
not excluded by G.S. 150B-29(b). 

(c) A recommended decision shall fully dispose 
of all issues required to resolve the case and shall 
contain: 

(1) an appropriate caption; 

(2) the appearances of the parties; 

(3) a statement of the issues; 

(4) references to specific statutes or rules at 
issue; 

(5) findings of fact; 

(6) conclusions of law based on the fmdings 
of fact and applicable constitutional prin- 
ciples, statutes, rules, or federal regu- 
lations; 

(7) in the discretion of the administrative law 
judge, a memorandum giving reasons for 
his findings of fact and conclusions of law; 

(8) a statement identifying the agency that will 
make the final decision; and 

(9j a statement that each party has the right 
to file exceptions to the recommended 
decision with the agency making the fmal 
decision and has the right to present writ- 



ten arguments on the decision to the 
agency making the final decision, 
(d) For good cause shown, the chief adminis- 
trative law judge may extend the 45-day time 
limit for issuing a recommended decision. An 
administrative law judge who needs an extension 
must submit a request for extension to the chief 
administrative law judge before the 45-day period 
has expired. 

Statutory Authority G. S. I50B-34. 

.0030 FINAL DECISIONS IN CONTESTED 
CASES 

An administrative law judge shall enter a fmal 
decision in a contested case: 

( 1 ) When he determines that the Office of Ad- 
ministrative Hearings lacks jurisdiction; 

(2) When he dismisses a case based on the au- 
thority in G.S. lA-1 or in this Chapter; 

(3) When he determines that a rule is void as 
apphed and there are no issues of fact to be 
determined; or 

(4) In deferred cases as provided in G.S. 7A- 
759. 

Statutory Authority G.S. 7A-759(e); 
l50B-33{b)(9){10); I50B-36. 



i 



i 



I 



5<S} 



NORTH CAROLINA REGISTER 



FINAL RULES 



LJ port request from the adopting agency, the 
text of rules will be published in this section. 

rV hen the text of any adopted rule is iden- 
tical to the text of that as proposed, adoption 
of the rule will be noted in the "List of Rules 
Affected" and the text of the adopted nde 
will not be republished. 

/idopted rules filed by the Departments of 
Correction, Revenue and Transportation are 
published in this section. These departments 
are not subject to the provisions ofG.S. I SOB, 
.Article 2 requiring publication of proposed 
rules. 



TITLE 17 DFPARTMENT OF Ri:\ ENLE 



CHAPTER 7 - SALES AND LSE TAX 



SLBCIIAI'TER 7B 



STATE SALES AND LSE 
TAX 



SECTION .0800 - ADJUSTMENTS: 

REPLACEMENTS: ALTERA! IONS AND 

INSTALLATION SALES 

.0803 CAUINELMAKERS 

(a) Cabinetmakers who fabricate and sell cabi- 
nets to homeowners, contractors and others for 
use in this state are liable for collecting and rem- 
itting the three percent state and two percent lo- 
cal sales or use tax on the sales price of such 
property, including charges for any services that 
go into the fabrication, manufacture or delivery 
of such tangible personal property without any 
deduction therefrom on account of the cost of 
the property sold, the cost of materials used, la- 
bor or service costs, interest charged, losses or 
any other expenses whatsoever. Any cost of la- 
bor or services rendered in instaUing or affixing 
such property when separately stated on sales 
invoices given to customers at the time of sale 
shaU not be included as a part of the sales price. 

(b) Cabinetmakers who, pursuant to a con- 
struction or performance-type contract with or 
for the benefit of the owner of real property, in- 
stall or affix tangible personal property, including 
cabinets, in or to real property are liable for tax 
on the cost or purchase price of materials and 
other such property used in perfonning the con- 
tract. 

llistoty Note: Statutory Authority 



G.S. 105-/64.4; 105-164.6; 105-262; 
Eff February I, 1976; 
Amended Eff October 1. 1988. 

SECTION .1 100 - SALES OF BLLK TOBACCO 
BARNS: FARM MACHINES AND MACHINERY 

.1122 RIGHT-OF-WAY EQUIPMENT 

Sales of tractors and bush-cutting equipment to 
power companies, railroad companies, counties, 
cities, and contractors for use in cutting and 
maintaining rights-of-way are subject to the three 
percent rate of tax. 

History Note: Statutory Authority 
G.S. 105-164.4; 105-164.6; 105-262; 
Eff February 1, 1976; 
Amended Eff October 1, 19S8. 

SECTION .3500 - .MACHINISTS: 
FOUNDRYMEN: AND PATTERN MAKERS 

.3502 MOLDS: DIES: MILL MACHINERY 

Sales of molds, pattems or dies by machinists, 
foundPt'men, pattern makers or others to manu- 
facturing industries and plants for their use as 
null machinery or mill machinery parts and ac- 
cessories are subject to the one percent state rate 
of sales or use tax with an eighty dollar ($80.00) 
maximum tax per article. Sales of molds, pat- 
tems or dies to other users or consumers in this 
state are subject to the three percent state and 
two percent local sales or use tax. 

History Note: Statutory Authority 
G.S. 105-164.4; 105-164.6; 105-262; 
Eff February 1. 1976; 
Amended Eff. October 1, 1988. 

.3505 MOLDS: DIES: NONMANUFACTURERS' 
USE 

Manufacturers making retail sales of molds, 
pattems or dies to nonmanufacturing users or 
consumers within and without this state, with 
right of possession and title thereto passing to 
such customers, are liable for collecting and 
remitting the three percent state and two percent 
local tax on such sales, when the manufacturers 
selling the molds, pattems or dies retain them in 
their possession within this state for use in man- 
ufacturing tangible personal property for sale to 
such customers. 

History Note: Statutory Authority 
G.S. '105-164.4: 105-164.6; 105-262; 
Eff February 1, 1976; 
Amended Eff October 1, 1988. 



NORTH CAROLINA REGISTER 



584 



LIST OF RULES AFFECTED 



NORTH CAROLINA ADMINISTRATIVE CODE 
EFPECTrVE: September I, 1988 



AGENCY 

DFP ARTMKNT OF COMMERCE 



ACTION TAKEN 



4 NCAC 2R 


.0820 




Amended 


3B 


.0104 




Repealed 




.0204 




Amended 


7 


.0504 




Amended 


DEPARTMENT OF CORRECTION 






5 NCAC 2G 


.0301 - .0303 




Amended 




.0304- .0313 




Adopted 


GO\ ERNOR'S OFFICE 








9 NCAC 2 


Executive Order Number 74 
LIT. April 27, 1988 
Executive Order Number 75 






EfT. August 12, 


1988 




DEPARTMENT OF HCMAN 


RESOURCES 






10 NCAC 26G 


.0511 




Amended 


43L 


.0201 




Amended 


DEPARTMENT OF INSl RANCE 






1 1 NCAC 1 


.0103 


Amended 




.0404 




Repealed 




.0406 




Repealed 


DEPARIMENT OF NATl RAL RESOURCES 


AND COMMUNITY DEVEUOPMENT 


15 NCAC IB 


.0204 




Amended 


2C 


.0118 




Amended 


2H 


.0114 




Amended 


21 


.0302 




Amended 


33 


.0102 




Amended 




.0105 




Amended 




.0308 




Amended 




.0401 




Amended 




.0404 




Amended 




.0501 




Amended 




.0504 




Amended 




.0701 




/Vmended 




.0801 




Amended 




.0901 




Amended 




.0905 




Amended 




.1109 




Amended 




.1504 




Amended 


3C 


.0203 




^Vmended 


6B 


.0003 




Amended 


711 


.0104 




Amended 




.0208 




Amended 



5S5 



NORTH CAROLINA REGISTER 



LIST OF RULES AFFECTED 



) 



.0405 

.1505 

7B .0405 

7J .0402 

12B .0101 

.0302 

13L .0907 

22A .0001 



Amended 

Amended 

Amended 

Amended 

Amended 

Amended 

Temp. Amended 

Expires 02-15-89 

Amended 



SKCRFTARY OF STATE 



NCAC 1 



.0203 
.0302 



.0101 

.0102 

.0201 

.0301 

.0101 

.0103 

.0105 

.0201 

.0101 

.0102- .0103 

.0602 

.0701 

.0101 

.0402 

.0101 

.0203 

.0207 



Amended 
Repealed 
Repealed 
Repealed 
Repealed 
Amended 
Amended 
Amended 
Amended 
Repealed 
Amended 
/Vmended 
Amended 
Amended 
Amended 
Amended 
Amended 



DHPARIMKNT OF SI Al F 1 KFASL RFR 



20 



NCAC 7 



.0102- .0103 

.0105- .0106 

.0107 

.0202 

.0304 

.0501 - .0502 

.0504 

.0505 



BOARD OF CFRirFIFI) I'l BLIC ACCOUNTANT FXAMINFRS 



Amended 

Amended 

Adopted 

Amended 

Amended 

Amended 

Amended 

Adopted 



21 NCAC 8A .0308 

8F .0302 

.0401 

8G .0107 

.0401 

.0407 

8J .0006 



Adopted 

Amended 

Amended 

Amended 

Amended 

Amended 

Amended 



BOARD FOR CONTRACTORS 



21 



NCAC 12 



.0606 

.0816 

.0817- .0819 

.0821 

.0824 

.0828 - .0830 



Repealed 
Repealed 
Adopted 
Adopted 
Adopted 
Adopted 



NORTH CAROLINA REGISTER 



586 



LIST OF RULES AFFECTED 



BOARD OK COSMETIC ART EXAMINERS 

21 NCAC 14C .0503 

BOARD OF DENTAL EXAMINERS 

21 NCAC 16A .0001 

16H .0104 

BOARD OF LANDSCAPE ARCHITECTS 



Amended 



Amended 
Amended 



21 



NCAC 28 



.0102 

.0103 

.0104- .0105 

.0106- .0107 

.0202 

.0205 

.0206 

.0301 

.0302 - ,0303 

.0401 



BOARD OF PHARMACY 



NCAC 46 .2004 



BOARD OF EXAMINERS OF PRACTICING PSYCHOLOGISTS 



21 



NCAC 54 



.1608 
.2301 
.2602 



Repealed 
Amended 
Repealed 
Amended 
Repealed 
Amended 
Repealed 
Amended 
Repealed 
Amended 



Adopted 



Amended 
Amended 
Adopted 



BOARD OF RKFRIGFRATION EXAMINERS 



21 NCAC 60 

C OMMLNH Y COLLEGES 



.0207 



Amended 



23 NCAC 2C .0208 

2D .0204 

.0323 - .0324 
.0325 - .0327 

2E .0303 
.0305 

HOLSING FINANCE AGENCY 

24 NCAC IK .0601 - .0605 

IM .0101 

OFFK E OF STATE PERSONNEL 

25 NCAC IJ .06 10 -.06 11 

2D .0301 



Adopted 

Amended 

Amended 

Adopted 

Amended 

Adopted 



Adopted 
Adopted 



Amended 
Temp. Amended 
Expires 02-20-89 



587 



NORTH CAROLINA REGISTER 



LIST OF RULES AFFECTED 



I 



[In accordance with G.S. 150B-59(c) the following rules were Repealed Eff. July 16, 1988.] 



nF.PARTMKNT OF ADMINISTRATION 

1 NCAC 33 .1204 

DFI'ARTMFNT OF COMMFRCE 



4 NCAC IB 


0109- 


.0110 


2R 


0803- 


.0804 


58 


0201 - 
0206 


.0203 


6B 


0102- 


.0104 


8 


0103- 


.0106 




0402- 


.0403 




0405 




12D 


0020- 


.0030 


I4A 


0005- 


.0006 


15 


0029 




17 


0201 - 


.0202 


DFF'AKTMFNT OF .11 STICE 






12 NCAC 1 


0105 




2H 


0202 




3B 


0202- 
0301 


.0203 


4C 


0204 




8 


0101 - 


.0102 




0106 - 


,0108 


DFl'AKrMFNr OF PI HI IC 1 


NSTRLCTION 



16 NCAC 1 .0002 

OFFICE OF AHMIMSTRATIVE HEARINGS 



Departmental Rules 
ABC Commission 
Cemetery Commission 

Credit Union 

Rural Electrification Authority 



Energy Division 
Economic Development 
Navigation and PUotage 
Seafood Industrial Park 



Departmental Rules 
Torrens Act Rules 
SBI 

Police Information Network 
General Statutes Commission 



26 



NCAC 2A .0601 - .0602 



NORTH CAROLINA REGISTER 



588 



NC AC INDEX 



TITLE/MAJOR DIVISIONS OF THE NORTH CAROLINA ADMINISTRATIVE CODE 
niLE DEPARIMENT 

1 Administration. Department of 

2 Agriculture, Department of 

3 Auditor, Department of State 

4 Commerce, Department of 

5 Coixections, Department of 

6 Council of State 

7 Cultural Resources, Department of 

8 Elections, State Board of 

9 Go\"emor. Oflice of the 

10 Human Resources, Department of 

11 Insurance, Department of 

12 Justice, Department of 

13 Labor, Department of 

14A Crime Control and Public Safety, Department of 

15 Natural Resources and Community Development, Department of 

16 Education. Department of 

17 Re\enue. Department of 

18 Secretary of State, Department of 
19A Transportation, Department of 
20 Treasurer, Department of State 

*21 Occupational Licensing Boards 

22 Administrative Procedures 

23 Community Colleges, Department of 

24 Housing I'inance Agency 

25 State Personnel, OlTice of 

26 Administrative Hearings, OtTice of 



I 



I 



NOTE: Title 21 contains the chapters of the various occupational licensing boards. 
CHAPTER LICENSING BOARDS 

2 Arcliitecturc, Board of 

4 Auctioneers, Commission for 
6 Barber Examiners, Board of 

5 Certified Public Accountant Examiners, Board of 
10 Chiropractic Examiners, Board of 

12 Contractors. Licensing Board for 

14 Cosmetic .-Vrt Examiners, Board of 

16 Dental Examiners. Board of 

18 Electrical Contractors, Board of Examiners of 

20 Eorcstcrs. Board of Registration for 

21 Geologists, Board of 

22 Hearing Aid Dealers and Fitters Board 
26 Landscape rVrchitccts, Licensing Board of 

28 Landscape Contractors, Registration Board of 

31 Martial & Family Therapy Certification Board 

32 Medical Examiners, Board of 

33 Midwifcp.' Joint Committee 

34 MortuarN' Science. Board of 

36 Nursing, Board of 

37 Nursing Home .Administrators, Board of 

38 Occupational 1 herapists. Board of 
40 Opticians, Board of 

42 OptometPs", Board of Examiners in 



I 



589 NOR TH CAROLINA REGIS TER 



NC AC INDEX 



44 Osteopathic Examination and Registration, Board of 

46 Pharmacy, Board of 

48 Physical Therapy, Examining Committee of 

50 Plumbing and Heating Contractors, Board of 

52 Podiatry Examiners, Board of 

53 Practicing Counselors, Board of 

54 Practicing Psychologists, Board of 
56 Professional Engineers and Land Surveyors, Board of 
58 Real Estate Commission 
60 Refrigeration Examiners, Board of 

62 Sanitarian Examiners, Board of 

63 Social Work, Certification Board for 

64 Speech and Language Pathologists and 
Audiologists, Board of Examiners of 

66 Veterinary Medical Board 



NORTH CAROLINA REGISTER 590 



CUMVLA TIVE INDEX 



CVMULA TIVE INDEX 

(April 1988 - March 1989) 



% 



1988 - 1989 

Pages Issue 

1 - 25 1 - April 

26 - 108 2 - April 

109 - 118 3 - May 

119 - 145 4 - May 

146 - 184 5 - June 

185 - 266 6 - June 

267 - 294 7 - July 

295 - 347 8 - July 

348 - 400 9 - August 

401 - 507 10 - August 

508 - 523 11 - September 

524 - 593 12 - September 



AO - Administrative Order 

AG - Attorney General's Opinions 

C - Correction 

E - Hrrata 

IZO - Hxccuti\e Order 

FDL - i'inal Decision Letters 

FR - Final Rule 

GS - General Statute 

JO - Judicial Orders or Decision 

FRA - list of Rules Affected 

M - Miscellaneous 

NP - Notice of Petitions 

PR - Proposed Rule 

SO - Statements of Organization 

I'R - Femporary Rule 



I 



ADMIMSl RATION 

Administrative Analysis Division, 447 PR 

Auxilian Scr\ices, 270 PR 

Departmental Rules, 270 PR 

State Construction, 187 PR 

\'outh Advocacy and Involvement Office, 148 PR 

ADMIMSFRAinK HKARINGS 

General. 579 PR 

Heannus Division, 76 PR, 581 PR 

Rules Division, 580 PR 



ADMIMSl RAII\K()RI)KR 

Administrative Order, 369 AO 



I 



591 



NORTH CAROLINA REGISTER 



CUMULA TIVE INDEX 



ACRICIJLTURE 

Food and Drug Protection Division, 271 PR 

N.C. Pesticide Board, 524 PR 

N.C. State Fair, 451 PR 

Plant Industry, 453 PR 

Standards Division, 452 PR 

Structural Pest Control Committee, 296 PR 

COMMl RCE 

/Mcoholic Beverage Control Commission, 276 PR 
Milk Commission, 120 PR, 190 PR 

COMMLMTY COLLEGES 

Community CoUcges, 287 PR, 557 PR 

CORRECTION 

Division of Prisons, 490 FR 

CRIME CONTROL AND PLBIJC SAl ETY 

Alcohol I aw Fnforcement, 47 PR 



ELECTIONS 






State Board of Elections, 


120 PR 




EXECl 1 1\ E ORDERS 






Executive Orders 68 - 


71, 1 


EO 




72, 119 


EO 




73, 146 


EO 


74 - 


75, 508 


EO 



EINAL DECISION I EEIERS 

Votmg Rights Act, 5 1 DL, 26 FDL, 185 FDL, 267 FDL, 295 FDL, 370 FDL, 401 FDL, 511 FDL 

GENERAL STATUTES 

Chapter 7A, 348 CiS 
Chapter 143B, 350 GS 
Chapter ISOB, 352 GS 

HUMAN RESOURCES 

Division of Aging, 229 PR 

Drug Commission, 113 I'R 

Facility Scn,ices, 455 PR, 524 PR 

Health Services, 7 PR, 220 PR, 296 PR 

Medical Assistance, 7 PR, 30 PR, 109 PR, 121 PR, 237 PR, 303 PR, 461 PR 

Mental Health: General, 457 PR, 530 PR 

Mental Health: Other Programs, 530 PR 

Mental Health: Hospit;ils, 459 PR 

Office of the Secretary, 31 PR 

Social Services Commission, 27 PR, 531 PR 

Vocational Rehabilitation Services, 371 PR 

INDEPENDENT AGENCIES 

Housmg Finance, 21 PR, 134 PR, 255 PR, 518 PR 

INSURANCE 

Agent Ser\'ices, 238 PR 

Companv Operations Division, 470 PR 

Fire and "Casualty Division, 32 PR, 461 PR 

Fire and Rescue Services Division, 122 PR, 149 PR 



NOR TH CA ROLINA REGIS TER 592 



CUMULA TIVE INDEX 



Life: Accident and Health Division, 534 PR 

JISIK K 

Cnminal Justice liducation and Training Standards, 304 PR 
Pn\ate Protecti\e Senices, 303 PR 

LICENSING BOARDS 

Cosmetic Art Fxaminers, 283 PR, 473 PR 

CPA, 73 PR, 472 PR 

I-xaminers of Plectrical Contractors, 151 PR 

Ilearinsz Aid Dealers, 77 FR 

Nursing, 376 PR. 477 PR 

Podiatn, F'xammers, 377 PR 

LIS 1 OF Rl IKS AFFECTED 

Apnl 1, 1988, 102 LRA 
Mav 1, 1988, 137 LRA 
June 1, 1988, 260 LRA 
July 1, 1988, 335 LRA 
Autjust 1, 1988. 496 LRA 
September 1, 1988, 585 LRA 

NA IT RAL RESOURCES AND COMMLN,ITV DE\ ELOPMENT 

Coastal Management, 11 PR, 67 PR, 254 PR, 281 PR 

Community Assistance, 69 PR. 555 PR 

Di\ ision of Economic Opportunity, 556 PR 

Lnvironmental Management, 241 PR, 278 PR 

Forest Resources, 68 PR 

Marine Fisheries, 62 PR 

Soil and Water Conservation, 1 1 1 F'R 

Wildlife Resources and Water Safety, 111 PR, 282 PR, 470 PR, 513 PR, 555 PR 

REVENUE 

License and Excise Tax. 1 13 FR 

Motor Fuels Tax. 258 FR 

Sales and Use Taxes, 386 FR, 584 IR 

SECRETARY OF STATE 

Securities Division, 125 PR 

ST.A I E PERSONNEL 

State Personnel Commission, 135 PR, 333 PR, 559 PR 

S FATE TREASURER 

Escheats and Abandoned Property, 328 PR 
Focal Go\'emment Commission, 18 PR 
Retirement Ssstems, 513 PR 

STA FEMENTS OF ORGANIZAI ION 

Statements of Organization, 403 SO 

TRANSPORI.ATION 

Division of Motor Vehicles, 172 FR, 258 FR 



I 



I 



I 



5 9 ? IS'OR TH CAR OLINA REGIS TER 



NOW AVAILABLE 



NORTH CAROLINA ADMINISTRATIVE CODE 



The full publicalion consists of 52 volumes, totaling in excess of 15,000 pages. It is supplemented monthly 
with replacement pages. A one year subscription to the full publication including supplements can be 
purchased for .%even hundred and fifty dollars ( S750.00) . Individual volumes may also be purchased with 
supplement service. Renewal subscriptions for supplements to the initial publication available starting 
January I, I9S9. 



PRICE LIST FOR THE 1987-88 SUBSCRIPTION YEAR 



Volume 


Title 


Chapter 


Subject 


New 
Subscription* 


Total 
Quantity Price 


1 - 52 


ruU Code 

1 

2 

2 

3 

4 

4 

5 

5 

6 

7 

8 

9 

10 

10 

10 

10 
10 
10 

10 
10 

10 
10 
10 
10 
10 
10 
10 
10 

11 


1 - 37 
1 - 24 
25- 52 
1 -4 
1 - 2 

3- 17 
1 - 2 
3-4 

1 - 4 
1 - 11 
1 - 9 
1 -4 
1 - 2 
3A - 3K 
3L - 3R 

3S - 3U 

4- 6 

7 

8- 9 

10 

11-14 

15- 17 

18 

19- 30 

31 - 33 

34-41 

42 

43 - 50 

1 - 15 


All titles $750.00 
Administration 90.00 
Agriculture 75.00 
Agriculture 75.00 
Auditor 10.00 
Commerce (includes ABC) 45.00 
Commerce 90.00 
Corrections 60.00 
Corrections 30.00 
Council of State 

Cultural Resources 60.00 
Elections 10.00 
Governor 45.00 
Human Resources 30.00 
Human Resources 90.00 
Human Resources 

(includes CON) 45.00 
Human Resources 30.00 
Human Resources 30.00 
Human Resources 

(includes Breathalizer) 30.00 
Human Resources 60.00 
Human Resources 90.00 
Human Resources 60.00 
Human Resources 45.00 
Human Resources 75.00 
Human Resources 90.00 
Human Resources 30.00 
Human Resources 60.00 
Human Resources 45.00 
Human Resources 90.00 
Insurance 90.00 




1 




2 




3 




4 




5 




6 




7 




8 




9 




10 




11 




12 




13 




14 




15 




16 




17 




18 




19 




20 




21 




22 




23 




24 




25 




26 




27 




28 






Continued 



\'()liimc I'itlc 







New 


Chapter 


Subject 


Subscription 


1 - 12 


Justice 


90.00 


1 - 6 


Labor 


30.00 


7 


OS HA 


45.00 


8- 15 


Labor 


45.00 


1 - 11 


Crime Control and 






Public Safety 


45.00 


1 - 2 


NRCD (includes EMC) 


90.00 


3- 6 


NRCD 


45.00 


7 


Coastal Management 


45.00 


8- 9 


NRCD 


30.00 


10 


\\'ndlife 


45.00 


11-22 


NRCD 


60.00 


1 - 6 


Fducation 


30.00 


1 - 6 


Revenue 


75.00 


7 - 11 


Revenue 


60.00 


1 - 7 


Secretary of State 


30.00 


1 - 6 


Transportation 


90.00 


1 - 9 


Treasurer 


45.00 


1 - 16 


Licensing Boards 


75.00 


17-37 


Licensing Boards 


75.00 


38- 70 


Licensing Boards 




1 - 2 


Admini5trati\e Procedures 


75.00 


1 - 2 


Commurutv CoUeges 


10.00 


1 


Housing Linance 


10.00 


1 


State Personnel 


60.00 


1 - 4 


Administrative I learings 


10.00 



Quantity 



Total 
Price 



I 



29 


12 


30 


13 


31 


13 


32 


13 


33 


14A 


34 


15 


35 


15 


36 


15 


37 


15 


38 


15 


39 


15 


40 


16 


41 


17 


42 


17 


43 


18 


44 


19 


45 


20 


46 


21 


47 


21 


48 


21 




22 


49 


23 


50 


24 


51 


25 


52 


26 



I 



Total 



(Make checks payable to Office of Administrative Hearings.) 

Ihis price includes the title in its current form plus supplementation for the subscription year. 
Subscription years are Januaiy I through December 31. 



MAIL TO: 



OFFICL OF ADMINISTRATIVE HEARINGS 

POST OFFICF: DRAWER 11666 

RAI FTGH. NORTH CAROLINA 27604 



« 



f09LZ BU1JOJE3 qyoN 'qS'SIB^ 

9991 1 jaMBJQ O d 

S3UIJB3I| aAIlBJlSIUIUipY JO 39UJO 



a)iHH 

dWVlS 

aovid 



FOLD HERE 



NORTH CAROLINA REGISTER 
ORDER FORM 



n Please enter my subscription for the North Carolina Register to start with the issue 

($95.00)/year subscription) 

n Renew North Carolina Register 

n Check Enclosed D Please bill me 

Please make checks payable to Office of Administrative Hearings 

NAME ADDRESS 

CITY STATE ZIP 

PHONE 



/ (Return to Office of Administrative Hearings - fold at line, staple at bottom and affix postage.) 



CHANGE OF ADDRESS: 



1 . Present Address 



NAME 



ADDRESS 



CITY 



STATE 



ZIP 



2. New Address 



NAME 



ADDRESS 



CITY 



STATE 



ZIP 



Office of Administrative Hearings 

P. O. Drawer 11666 
Raleigh, North Carolina 27604 



!:■' '- 



r~- r*"»* r- 



I'lRST CLASS 



V^^'^A y 



' S[?I5"88 i ■ 



1 n r . 






612 

UNIU. OF NORTH CAROLINA 

AT CHAPEL HILL LIB. 

iiAN HECKE-UETTACH BLDG. 064 ft 

CHAPEL HILL 



NC 27514